COMMODITIES - REVIEW
Commodities fell broadly yesterday as traders shifted their attention from this past weekend's Iran deal back to speculation about the Fed. The big question remains: Will the central bank taper in December or sometime next year?
Today's housing data was strong. The U.S. Census Bureau reported that building permits in October jumped by 6.2 percent to 1,034,000 units annualized, the best level in more than five years.
Meanwhile, S&P/Case Shiller said that its home price index rose by 1.03 percent in September, better than expected. Home prices were up by 13.29 percent from a year ago.
Taking a look at currency markets, the U.S. Dollar Index was last trading down by 0.34 percent to 80.65. In bond markets, the U.S. 10-year yield fell by 3 basis points to 2.7 percent.
Stocks around the globe were under pressure and the dollar slipped on Tuesday amid renewed political tensions in the East China Sea.
U.S. stocks ended little changed during a holiday-abbreviated week as investors found few incentives to extend a rally that has repeatedly taken indexes to record peaks, though a proposed acquisition prompted some risk appetite for equities.
Permits for U.S. home construction rose to the highest level in nearly 5-1/2 years in October, suggesting the housing market recovery remained intact despite recent signs of slowing.
"It is a market that is on data watch as the Fed is clearly on data watch," said Quincy Krosby, market strategist with Newark, New Jersey-based Prudential Financial, which has $1 billion in assets under management. "Permits were very, very good and it will translate into more jobs."
The Dow Jones industrial average closed up 0.26 point, or 0.00 percent, at 16,072.80. The Standardalso 10.81% directs, to leave only low 39.2% dealers awards, the lowest since July's 37.8% dealer bid. The auction also drew a 2.61 bid/cover. Ten-year U.S. Treasury were closing around 2.7075%, up from an earlier low of 2.696%, and compared to Monday's closing levels around 2.735%.
* The dollar tracked U.S. Treasury yields lower Tuesday, sending the euro nearly back to last week's highs around $1.3580. Lower U.S. Treasury yields served also to underpin U.S. stocks, with the Dow Jones Industrial Average and S&P 500 posting new life-time highs. However, the trading action was lackluster, with few wanting to position ahead of key eurozone and U.S. data, due out later in the week, and into what for many will be a long Thanksgiving Day holiday. The DJIA closed flat at 16,072.80, the Nasdaq Composite closed up 23 or 0.58% at 4017.749 and the S&P 500 closed flat at 1802.76. Earlier, the DJIA and S&P 500 posted new life-time highs of 16,120.25 and 1808.42 respectively. The Nasdaq Composite posted a new 13-year-plus high close of 4026.991.
* NYMEX January light sweet crude oil futures settled down $0.41 at $93.68 per barrel, after trading in a $93.55 to $94.69 range. The front contract has traded in a $92.43 (Nov 19) to $96.65 range this month. ICE Brent settled down $0.12 at $110.88 per barrel after trading in a $110.41 to $111.49 range. The spread between Brent and WTI at the close was $17.20, the widest since March.
Gold and copper prices fell on Tuesday as encouraging U.S. housing activity fed expectations that the Federal Reserve might soon decide to reduce its bond-buying stimulus program.
Oil also closed down as investors awaited new developments after a weekend nuclear deal between Iran and world powers brought no immediate change to the freeze on crude exports from the Middle East country.
Abundant supplies weighed on some commodities. Raw sugar futures fell for a sixth straight day, hitting an 8-week low, after Brazil's latest harvest update showed the top sugar grower on track to a record cane crop.
Corn prices fell with 95 percent of the U.S. crop harvested. U.S. production will set a record high of 13.989 billion bushels this year, exceeding last year's drought-shortened harvest by 30 percent, the USDA said.
U.S. natural gas futures rose nearly 1 percent, finishing up for a fifth session in a row and leading the CRB's gains, as cold weather boosted heating demand in key consuming regions.
The spot price of gold fell nearly 1 percent to around $1,242 an ounce, after latest housing data suggested an economic resilience that could make the Fed rethink its monetary easing program. Permits for future U.S. home construction hit a near 5-1/2 year high in October. Separately,a report showed the S&P/Case Shiller composite index of home prices in 20 metropolitan areas jumped 13.3 percent in September.
In copper, the metal's benchmark 3-month futures contract in London closed at $7,065 a tonne, down from $7,099 on Monday.
The Thomson Reuters/Core Commodity CRB index fell 0.1 percent to settle at 274.7724 points. Ten of the 19 commodities tracked by the CRB fell, with corn sliding 1.5 percent to become the day's biggest decliner.
** GOLD: Gold and silver slipped. The yellow metal was last trading down by $9.35, or 0.75 percent, to $1,241.95, while the gray metal fell by $0.38, or 1.86 percent, to $19.87.
Gold fell nearly 1 percent on Tuesday, retreating from a one-week high set earlier in the session, as encouraging U.S. housing activity stirred fears the Federal Reserve will soon decide to reduce its bond-buying stimulus program.
Bullion came under pressure after data showed permits for future U.S. home construction hit a near 5-1/2 year high in October, and a report showed the S&P/Case Shiller composite index of home prices in 20 metropolitan areas jumped 13.3 percent in September. The reports were the latest signs of strength in the economy, despite headwinds from rising mortgage rates and last month's partial government shutdown.
"The positive building permits and Case Shiller numbers are signalling the possibility that tapering is back on the table, weighing down on the gold," said Thomas Capalbo, a precious metals broker at New York futures brokerage Newedge.
Spot gold was down 0.9 percent at $1,241.24 an ounce early trading, its highest since Nov. 20. U.S. gold futures outperformed spot bullion, and they settled up 20 cents at $1,241.40 an ounce.
Trading volume was at 282,600 lots, preliminary Reuters data showed, nearly double its 30-day average of 156,000 lots and largely boosted by the December-February contract rollover ahead of the December contract's first-notice day on Friday.
Some investors reduced their bullish bets after a rally driven by buying related to Comex December option expiry on Monday, said Frank McGhee, head precious metals dealer at Chicago commodities brokerage Alliance Financial LLC.
A higher Slow prices big concern
South Dakota farmers have harvested most of this year's row crops and the frigid weather shouldn't hurt grain still in the field, though fall tillage is probably over because the ground is frozen.
The state had colder-than-normal temperatures over the past week, but dry weather helped the remaining harvest wrap up in most areas, the National Agriculture Statistics Service said Monday in its weekly crop progress report.
Soybeans are done and the corn harvest is an estimated 95 percent complete, which is behind last year when it was out of the field but ahead of the 84 percent average for this time of year, the report said.
"In both corn and soybeans, we're actually running ahead of the five-year average," said Carter Anderson, state director of the statistics service.
Brian Smith, of Montrose, president of the South Dakota Corn Utilization Council, said there's very little corn still in the field around his farm in eastern South Dakota.
The cold temps don't keep farmers from harvesting the rest, as long as there's no snow on it, he said. But fall tillage is likely done, Smith said.
"The ground is frozen now, so a guy couldn't do that if you wanted to. I doubt it's going to thaw out enough," he said.
The corn harvest in some parts of the Midwest was hampered by a shortage of storage and propane, but that wasn't a problem in South Dakota, Smith said.
The big ongoing concern is low prices for corn and soybeans.
"There's a lot of corn out there right now. It's going to be an interesting year going ahead. It would take a major event to drive prices higher right now," Smith said.
"The margins are tighter, so we're going to have to buckle down and watch our marketing and see what happens."
LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1241.40 0.20 0.0 1239.20 1257.80 159,482
US Silver DEC 19.848 -0.034 -0.2 19.785 20.290 48,356
US Plat JAN 1371.90 -5.90 -0.4 1368.50 1391.70 6,982
US Pall DEC 716.20 -3.70 -0.5 711.20 724.15 6,005
Gold 1241.24 -10.97 -0.9 1240.25 1256.49
Silver 19.810 -0.490 -2.4 19.820 20.300
Platinum 1367.30 -16.94 -1.2 1371.75 1389.50
Palladium 715.47 -3.25 -0.5 715.25 722.25
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 282,604 156,740 159,380 19.2 -0.79
US Silver 87,971 52,679 54,438 26.32 1.33
US Platinum 7,224 9,465 12,987 16.77 0.22
US Palladium 13,165 7,706 5,844 20.82 1.06
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US crude 93.46 -0.41 -0.4% 1.8%
Brent crude 111.03 0.03 0.0% -0.1%
Natural gas 3.818 0.029 0.8% 13.9%
Gold 1242.10 -0.80 -0.1% -25.8%
US Copper 3.21 -0.01 -0.3% -12.0%
LME Copper 7065.00 -34.00 -0.5% -10.9%
Dollar 80.639 -0.280 -0.4% 5.0%
CRB 274.772 -0.309 -0.1% -6.9%
US corn 418.50 -6.25 -1.5% -40.1%
US soybeans 1329.25 0.00 0.0% -6.3%
US wheat 646.50 -6.00 -0.9% -16.9%
US Coffee 108.15 0.05 0.0% -24.8%
US Cocoa 2773.00 -35.00 -1.2% 24.0%
US Sugar 17.30 -0.02 -0.1% -11.3%
US silver 19.848 19.649 1.6% -34.3%
US platinum 1371.90 -5.90 0.0% -10.8%
US palladium 716.20 -3.70 -0.5% 1.8%