Written by Sumit Roy  |

October 25, 2012

Market Wrap: Gold Rises $10, Oil Advances As Sentiment Improves; NatGas Holds Steady After Inventory Report

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Commodities traded mixed.

Commodities were mixed again today, but sentiment was more positive than it has been in previous sessions amid encouraging macroeconomic developments. Early in the day, 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 up by 0.17 percent to 80.05.

• Gold and silver rose solidly off of Wednesday's six-week lows. The yellow metal was last trading higher by $10.52, or 0.62 percent, to $1712.47, while the gray metal rose by $0.35, or 1.11 percent, to $32.11.
  
  Platinum added $6, or 0.38 percent, to $1566.25 and palladium advanced $9.25, or 1.55 percent, to $605.
  
  "...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.
  
  
• Crude oil rose today after seven-straight sessions of declines. Brent was last trading up by $0.53, or 0.49 percent, to $108.38, while WTI added $0.22, or 0.26 percent, to $85.95.
  
  "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."
  
  
• Natural gas fell by $0.01, or 0.29 percent, to $3.44/mmbtu. Today's Weekly Storage report from the EIA showed that operators injected 67 billion cubic feet into storage last week, within analyst expectations.
  
  
• The grain complex underperformed. Corn was last trading down by $0.10, or 1.29 percent, to $7.45/bushel, while soybeans edged down by $0.09, or 0.59 percent, to $15.61 and wheat shed $0.09, or 0.99 percent, to $8.75.
  
  "... 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.
  
  
• Copper was last trading down by $0.01, or 0.38 percent, to $3.55/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.