(Kitco News) - Gold prices are modestly higher in early U.S. trading Monday. Gold and silver got a lift from an unexpected interest rates cut from China. A weaker U.S. dollar index Monday morning is also working in favor of the precious metals bulls. April Comex gold was last up $5.60 at $1,218.70 an ounce. May Comex silver was last up $0.122 at $16.68 an ounce.

During the weekend China eased its monetary policy by reducing interest rates. The People’s Bank of China’s surprise move saw the one-year loan rate and the one-year deposit rate both reduced by 0.25%–to 5.35% and 2.5%, respectively. The central bank said the move was due to increasing deflationary price pressures. This news is bullish for the raw commodity sector as China is a major raw commodity importer.

Meantime, China’s purchasing managers index (PMI) was released Monday. The HSBC China PMI came in at 50.7 in February from 49.7 in January. A reading above 50.0 suggests growth. However, the official China PMI was released during the weekend and showed contraction (below 50.0), reports said.

In other overnight news, Eurozone consumer prices fell 0.3% in February, year-on-year, which was the third monthly decline in a row. However, the number was expected to have declined by 0.4% in February. Unemployment in the EU fell to 11.2% in January from 11.3% in December. Also, the Euro zone manufacturing PMI was 51.1 in February from 51.0 in January.

Geopolitics moved closer to the front burner of the market place to start the trading week, on news that a Russian politician and leading critic of President Vladimir Putin was assassinated right outside the Kremlin. The Putin regime denied involvement but many Russians are skeptical. The Russian ruble was pressured further on this news. More and more, Russia is becoming isolated from the West, which does not at all bode well for stability in that region of the world down the road. Such is also a longer-term bullish factor for the safe-haven gold market.

U.S. economic data due for release Monday includes personal income and outlays, construction spending, the U.S. manufacturing purchasing managers’ index (PMI), the global manufacturing PMI, and the ISM manufacturing report on business.

(Note: Follow me on Twitter–@jimwyckoff–for breaking market news.)

Wyckoff’s Daily Risk Rating: 6.0 (Trader and investor market risk aversion is not real high early this week, but there are elements lurking that could quickly rile the market place.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

The London A.M. gold fixing is $1,216.75 versus the previous P.M. fixing of $1,214.00.

Technically, April gold futures bears still have the overall near-term technical advantage as a six-week-old downtrend line is still in place on the daily bar chart, but now just barely. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,236.70. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at the March low of $1,190.00. First resistance is seen at the overnight high of $1,223.00 and then at $1,230.00. First support is seen at the overnight low of $1,212.30 and then at Friday’s low of $1,204.10. Wyckoff’s Market Rating: 3.5

May silver futures bears still have the overall near-term technical advantage. Prices are also in a six-week-old downtrend. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at the overnight high of $16.79 and then at last week’s high of $16.905. Next support is at $16.50 and then at Friday’s low of $16.425. Wyckoff’s Market Rating: 3.0.

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