(Kitco News) - Gold and silver prices are solidly up in early U.S. trading Tuesday, on reports of renewed gold purchases by China’s central bank. A weakening U.S. dollar index so far this week is also a friendly outside-market element for the precious metals markets. On this day the gold and silver bulls are brushing aside rising U.S. Treasury yields. February gold was last up $21.30 at $2,668.70 and March silver was up $0.407 at $30.99.
Reports said China’s central bank increased its gold reserves for a second month in December, by 300,000 ounces, to 73.3 million, suggesting a renewed appetite for the yellow metal after a six-month pause in purchases last year.
Asian and European stock indexes were mixed to firmer overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
In overnight news, Euro zone inflation in December rose farther above the European Central Bank’s target, at up 2.4%, year-on-year, versus up 2.2% in the November report.
The U.S. government has blacklisted gaming company Tencent and Tesla battery supplier CATL for alleged links to China’s military, threatening to escalate tensions between the world’s two largest economies.
Bloomberg reports fixed-income markets are sending a warning signal to equity market bulls: Stocks are close to the most overvalued against corporate credit and Treasuries in around two decades. That’s according to a metric that looks at how much profit companies can generate relative to their stock price, also known as the earnings yield, and then compares that against how much yield an investor would earn from bonds.
The U.S. data point of the week is the employment situation report for December on Friday. It’s forecast to show non-payrolls increasing by 160,000. That compares to a gain of 227,000 in the November jobs report.
The key outside markets today see the U.S. dollar index lower on corrective pullback after hitting a more-than-two-year high last week. Nymex crude oil futures prices are up and trading around $74.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is on the rise and is presently at 4.642%--the highest level since 2023.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook retail sales report, the international trade in goods and services report, the ISM report on business services, and the job openings and labor turnover survey (JOLTS) report.
Technically, February gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the November low of $2,565.00. First resistance is seen at last week’s high of $2,681.00 and then at $2,700.00. First support is seen at $2,650.00 and then at the overnight low of $2,643.50. Wyckoff's Market Rating: 6.0.
March silver futures bears have the slight overall near-term technical advantage. A nine-week-old downtrend is still in place on the daily bar chart. More gains this week would negate the downtrend, however. Silver bulls' next upside price objective is closing prices above solid technical resistance at $32.00. The next downside price objective for the bears is closing prices below solid support at the December low of $29.145. First resistance is seen at $31.50 and then at $32.00. Next support is seen at the overnight low of $30.41 and then at $30.00. Wyckoff's Market Rating: 4.5.
(Hey! My “Markets Front Burner” weekly email report is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, I’ll throw in an educational feature to move you up the ladder of trading/investing success. And it’s free! Sign up here; it’s real easy. https://www.kitco.com/services
