Written by Sumit Roy  |

January 10, 2013

Market Wrap: Gold & Silver Spike As Dollar Tumbles After ECB Comments, WTI Hits 4-Month High, NatGas Gains

Details

Commodities rose across the board.

Commodities rose across the board amid strong economic data and as the dollar plunged. Stocks advanced to nearly the highest levels since 2007. In today's news, Chinese exports rose by 14.1 percent year-over-year in December, above the 5 percent that was expected and the fastest rate in seven months. Imports rose by 6 percent in the month, the fastest rate in six months.

Meanwhile in Europe, the ECB held its benchmark overnight interest rate steady at 0.75 percent, as expected. ECB President Mario Draghi said that economic weakness in the eurozone is likely to extend into 2013, but that the economy should gradually recover later in 2013. Those comments helped the euro currency rebound and pressured the U.S. dollar.

The U.S. Dollar Index plunged by 1.04 percent to 79.72.

• The dollar's decline helped gold and silver rally. The yellow metal was last trading up by $19.05, or 1.15 percent, to $1676.80, while the gray metal added $0.52, or 1.72 percent, to $30.89.
  
  Platinum gained $34.25, or 2.14 percent, to $1632.50 and palladium rose by $13.80, or 2.01 percent, to $701.30.
  
  "Platinum fell the most last year. Given people believe in a U.S. economic recovery, industrial metals should outperform gold and we should see platinum prices move above gold again," said one trader.
  
  
• Crude oil was higher thanks to the aforementioned China data. Brent rallied by $0.13, or 0.12 percent, to $111.89, while WTI rose by $0.79, or 0.85 percent, to $93.89—the best level since September.
  
  "This is positive for commodities including oil demand," said Jeremy Friesen, commodity strategist at Societe Generale. "We continue to see outperformance for China through the first quarter as this cyclical recovery continues, but improved external demand would add to this bullishness."
  
  
• Natural gas gained $0.08, or 3.54 percent, to $3.19/mmbtu after the EIA reported that operators withdrew 201 billion cubic feet from storage last week, above the 183 to 198 bcf withdrawal most analysts were expecting.
  
  "This was definitely a bullish withdrawal," said Kent Bayazitoglu, analyst at Gelber & Associates. "It was a cold week. People had reduced their expectations because of the New Year's holiday, but this number would have been bullish even if it hadn't been a holiday week."
  
  
• The grain complex was slightly higher, one day ahead of the USDA's Crop Report. Corn was last trading up by $0.04, or 0.58 percent, to $6.98/bushel, while soybeans rose by $0.03, or 0.19 percent, to $14.23 and wheat rose fractionally to $7.46.
  
  "Consumers have become too complacent waiting for lower prices," said Christopher Gadd, analyst at Macquarie. "The story going forward will be an improvement in U.S. exports. Buyers have nowhere else to turn."
  
  
• Copper was last trading up by $0.04, or 1.08 percent, to $3.71/lb on Comex.
  
  "Today it's a risk-on day, therefore that's leading to some upside for all the metals," said Societe Generale analyst Robin Bhar. "But whether they can attack recent highs remains to be seen. This week is the first full week of trading in 2013 and volumes are not spectacular. There is still caution around, and I think some of the rallies may be not sustainable."