Gold rallies as China central bank stocking up on gold again

(Kitco News, Tues. Jan. 7th, 2025) – Gold and silver prices are higher in midday U.S. trading Tuesday, but down from daily highs. The metals were boosted in part on reports of renewed gold purchases by China’s central bank. A firmer U.S. dollar index today did help to push gold and silver prices down from their daily highs. Rising U.S. Treasury yields also somewhat curbed buyer interest in the precious metals today. February gold was last up $18.60 at $2,665.90 and March silver was up $0.092 at $30.675.

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.

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 higher. 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 around 4.7%–the highest level since 2023.

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 today’s low of $2,643.50.

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 today’s high of $31.025 and then at $31.50. Next support is seen at the overnight low of $30.41 and then at $30.00.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com