(Kitco News) - Gold and silver prices are higher in early U.S. trading Wednesday, following news that China has implemented an economic stimulus measure that has positive demand implications for the metals markets. February gold was last up $8.00 at $2,033.80. March silver was last up $0.418 at $22.88.
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China’s central bank eased its monetary policy Wednesday, announcing it would cut the reserve requirement ratio for its commercial banks by 50 basis points, according to officials. The move is expected to inject 1 trillion yuan ($140 billion) of liquidity into Chinese markets. China and Hong Kong stocks rallied on the news. Some analysts said the move by China’s central bank is not enough and more government spending is needed to shore up the world’s second-largest economy. Still, the news has implications for better Chinese demand for raw commodities, including metals.
Asian and European stock markets were mixed to firmer overnight. U.S. stock index futures are set to open higher when the New York day session begins. The S&P and Nasdaq indexes have hit record highs this week as risk appetite in the general marketplace has up-ticked recently.
In other news, the Euro zone composite (services and manufacturing) purchasing managers index (PMI) came in at 47.9 in January, which was below expectations. A reading below 50.0 suggests contraction.
The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are slightly down and trading around $74.25 a barrel. Meantime, the yield on the benchmark U.S. Treasury 10-year note is presently fetching 4.105%.
U.S. economic data due out Wednesday includes the weekly MBA mortgage applications survey, the U.S. flash and services manufacturing purchasing managers indexes (PMI) and the weekly DOE liquid energy stocks report.
Technically, the gold futures bulls have the overall near-term technical advantage but have faded a bit. Prices are still in a three-month-old uptrend on the daily bar chart, but just barely. Bulls’ next upside price objective is to produce a close in March futures above solid resistance at last week’s high of $2,062.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at this week’s high of $2,039.30 and then at $2,050.00. First support is seen at the overnight low of $2,023.60 and then at this week’s low of $2,017.40. Wyckoff's Market Rating: 6.0.
The silver bears have the firm overall near-term technical advantage. Prices hit a three-month low Monday and are in a six-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at the October low of $21.17. First resistance is seen at $23.00 and then at $23.25. Next support is seen at the overnight low of $22.465 and then at $22.00. Wyckoff's Market Rating: 3.5.
