FB: Gold Rallies On Bullish Overnight News From China, Europe
(Kitco News) - Gold futures prices are moderately higher in early U.S. trading Friday, boosted on a surprise interest rate cut in China and by more dovish comments from the European Central Bank. February Comex gold was last up $9.50 at $1,200.70 an ounce. Spot gold was last up $6.10 at $1,201.25. March Comex silver last traded up $0.277 at $16.47 an ounce.
In an unexpected move overnight, China’s central bank reduced its interest rates in order to stimulate a decelerating China economy, which is the second-largest in the world. The past few months have seen China economic growth data that has generally disappointed the market place. The move by China is a bullish development for the raw commodity sector, including precious metals, and also helped to boost stock markets worldwide.
In other overnight news that was deemed bullish for stocks and commodities markets, European Central Bank president Mario Draghi on Friday reiterated the ECB will use all means within the ECB’s mandate to return the EU to its inflation target, including implementing quantitative easing—and said the ECB will do it quickly.
U.S. S&P and Dow stock index futures hit record highs overnight, while the Nasdaq notched a 14-year high on the China and Draghi news. The U.S. dollar index is sharply higher and trading near a four-year high early Friday, while the Euro currency is sharply down on the latest Draghi remarks.
The market place is looking ahead to next week’s OPEC meeting. Some believe the beleaguered oil cartel could reduce its overall daily oil production quota, or at least call for strict adherence to existing quotas, most of which are ignored by OPEC nations. Nymex crude oil futures are trading not far above the recent three-year low.
U.S. economic data due for release Friday is light and includes the Kansas City Fed manufacturing survey.
(Note: Follow me on Twitter–@jimwyckoff–for breaking market news.)
Wyckoff’s Daily Risk Rating: 5.0 (Geopolitical risks have been moved to the back burner of the market place…for now. The still-simmering Russia-Ukraine conflict could be the next geopolitical hotspot to escalate.)
