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(Kitco News) – According to the latest data from the Institute for Supply Management (ISM), the gold market is retaining strong gains but is not responding to the slowing momentum in the US manufacturing sector.
On Monday, the ISM said its non-manufacturing index posted a reading of 58.7% for January, down from the December reading of 60.7%. The data was much weaker than expected as the consensus forecast called for a 60% reading.
The report showed that the sector is still expanding, but at a slower pace than expected. Readings above 50% in these diffusion indices are considered a sign of economic growth and vice versa. The more an indicator is above or below 50%, the greater or smaller the rate of change.
“The manufacturing economy continued to recover in January. Investigative committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term closures to sanitize facilities and difficulties returning and hiring workers continue. to cause tensions that limit the growth potential of manufacturing, ”said Timothy Fiore, chair of the ISM’s manufacturing committee.
Gold prices are barely responding to the latest economic data, with the market posting gains of nearly 1% on the day. April gold futures traded last at $ 1,867.40 an ounce, up 0.92% on the day. Gold prices are being driven higher by a massive surge in silver prices, which hit an eight-year high, some analysts say.
Looking at some of the evidence from the report, the new orders index fell to 61.1%, down from the 67.5% reading in December. Meanwhile, the production index fell to 60.7%, down from the December reading of 64.7%.
Looking at the job market, the report says the employment index rose to 52.6%, up from the previous reading of 51.7%.
Not only has the manufacturing sector lost momentum in the past month, but pricing pressures are on the rise, which is positive for gold as a traditional hedge against inflation. The report says the price index rose to 82.1%, up from the December reading of 77.6%.
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.
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