Gold Prices Trim Gains Following Rise In ISM Manufacturing Numbers
(Kitco News) - Gold market has trimmed some of its gains, falling from recent highs, after the U.S. manufacturing sector ended the year on a strong note, according to data from the Institute for Supply Management (ISM).
Wednesday, the ISM said its manufacturing index showed a reading of reading 59.7 for December, well above economists’ expectations and up compared to November’s reading of 58.2%. Consensus forecasts were calling for a reading of 58.1%.
Readings above 50% in such diffusion indexes are seen as a sign of economic growth, and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.
Ahead of the report, gold prices were trading near their highest level in more than three months. Initial reaction has seen the yellow metal fall to unchanged levels on the day. February gold futures last traded at $1,317.50 an ounce, up 0.11% on the day.
“Comments from the panel reflect expanding business conditions, with new orders and production leading gains; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow in December,” the report said.
Looking at the components of the report, the New Orders Index rose to 69.4% up compared to the November reading of 64%. At the same time the Production Index showed a reading of 65.8%, up compared to November’s level of 63.9%.
However, the sector saw slower growth in the labor market. The Employment Index fell to 57%, from November’s reading of 59.7%.
The sector also saw rising inflation pressures with the Price Index increasing to 69%, up from the November reading of 65.5%.
Andrew Hunter U.S. economist at Capital Economics said that the rise in U.S. manufacturing bodes well for U.S. GDP.
“The rebound in the ISM manufacturing index to 59.7 in December, leaves it close to a 13-year high and at a level that historically has been consistent with GDP growth accelerating to more than 4% in annual terms,” he said.