Written by Sumit Roy  |

October 25, 2012

Morning Call: Gold & Silver Rise Solidly On $125 Billion BoJ Asset Purchase News, Oil Gains, NatGas Steadies

Details

Commodities rise broadly.

Commodities are rising broadly today after positive macroeconomic developments on the global front. A major Japanese newspaper reported that the Bank of Japan may increase the size of its asset-purchase program by 10 trillion yen ($125 billion) at its next policy meeting on Oct. 30.

Meanwhile, the U.K. economy performed better than expected in the third quarter. Gross domestic product in the country rose by 1 percent from the second quarter, besting the 0.6 percent increase that was anticipated. Year-over-year, GDP was flat, better than the decline of 0.5 percent that analysts were forecasting.

In the U.S., durable goods orders surged 9.9 percent in September, recovering from the prior month's 13.1 percent plunge. Excluding the volatile transportation sector, orders rose by 2 percent after having fallen 2.1 percent in August.

Finally, the number of people filing for unemployment benefits in the U.S. dropped from 392K to 369K last week, matching expectations.

Taking a look at currency markets, the U.S. Dollar Index was last trading down by 0.11 percent to 79.83.

• Gold and silver are rising solidly off of Wednesday's six-week lows. The yellow metal was last trading higher by $14.55, or 0.85 percent, to $1716.50, while the gray metal rose by $0.38, or 1.2 percent, to $32.14.
  
  Platinum added $15.38, or 0.99 percent, to $1575.63 and palladium advanced $8.45, or 1.42 percent, to $604.20.
  
  "...we envisage a renewed rally [in gold] over the coming weeks, given the central bank's ultra-expansionary monetary policies and the likely post-election problems in the U.S. with the looming fiscal cliff and the debt ceiling," said analysts at Commerzbank.
  Gold bounces from seven-week low, eyes Bank of Japan
  
  
• Crude oil is rising today after seven-straight sessions of declines. Brent was last trading up by $1.16, or 1.08 percent, to $109.01, while WTI added $0.93, or 1.08 percent, to $86.66.
  
  "The price is quite oversold," said Tetsu Emori, commodity fund manager at Astmax. "Everybody is positive on the Japanese equity market today from expectations that the Bank of Japan may ease policies."
  Oil Rebounds After Five-Day Loss on U.S. Outlook, Japan
  
  
• Natural gas was last trading down by $0.01, or 0.14 percent, to $3.45/mmbtu. Today's Weekly Storage report from the EIA is expected to show that operators injected 63 to 67 billion cubic feet into storage last week, according to a survey of analysts by Platts.
  Ahead of the Bell: Natural gas supplies
  
  
• The grain complex is narrowly mixed, Corn was last trading down by $0.02, or 0.2 percent, to $7.53/bushel, while soybeans edged up by $0.01, or 0.03 percent, to $15.71 and wheat shed $0.04, or 0.42 percent, to $8.80.
  
  "... soybeans have rallied 70 to 80 cents since the USDA report as the outlook for beans is still pretty positive. There are no signs of demand letting off," said Victor Thianpiriya, an agricultural strategist at ANZ.
  Wheat rally stalls as Ukraine reaction subsides
  
  
• Copper was last trading up by $0.01, or 0.21 percent, to $3.58/lb on Comex.
  
  "The manufacturing data is not back to the level we would like, but it was higher month-on-month, so at least things aren't deteriorating. All the recent data has been supportive, but there's nothing out there that would make you want to turn bullish straight away," Societe Generale analyst Robin Bhar said.
  
  "Although the feeling is that the economy is bottoming out and there should be better growth and better demand over the coming months, it may not be until early next year that we actually see stronger buying interest," Bhar added.
  Copper up slightly on Fed commitment, U.S., China data
  
  

What to Watch For:

8:30 a.m. ET: Initial Jobless Claims

8:30 a.m. ET: Durable Goods Orders (September)

10:00 a.m. ET: Pending Home Sales (September)

10:30 a.m. ET: Weekly Natural Gas Storage Report