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Gold Prices Near Session Lows Despite Miss In ISM Manufacturing Index

Kitco News

(Kitco News) - The gold market is not finding any traction holding near session lows even as economic data from the Institute of Supply Management (ISM) reported lower than expected sentiment within the manufacturing sector.

Wednesday, ISM said that its manufacturing index dropped to a reading of 58.1% in July, down from June’s reading of 60.2% and missing estimates. Consensus forecasts were calling for a reading of 59.4%.

While the data were weaker than expected, they still suggest that the manufacturing sector continues to grow, albeit at a slower pace than last month. Readings above 50 are seen as a sign of economic growth; the farther an indicator is above or below 50, the greater or smaller the rate of change.

"Comments from the panel reflect continued expanding business strength," the report said. "Respondents are again overwhelmingly concerned about how tariff-related activity, including reciprocal tariffs, will continue to affect their business."

The gold market has been under pressure for most of the session with momentum picking up following stronger than expected private sector employment data. December gold futures last traded at $1,227.60 an ounce, down 0.49% on the day.

The components of the report showed a mixed picture of the health of the manufacturing sector. The report said that the New Orders index dropped to a reading of 60.2%, down from June’s reading of 63.5%; at the same time the Production Index dropped to 58.5%, down from June’s reading of 62.3%.

However, the labor market remains robust with the Employment Index increasing to 56.5%, up from the previous level of 56%.

Negative for the gold market, the report noted a drop in inflation pressures; gold is traditionally seen as a hedge against rising price pressures. The Price Index dropped to a reading of 73.2%, down from the previous reading of 76.8%.

Katherine Judge, senior economist at CIBC World Markets, shrugged off the weaker-than-expected numbers.

Taking a step back shows that the index is still entrenched in expansionary territory,” she said. “Indeed, the reading is in line with the robust prints seen over the past year and is still indicative of healthy growth in the factory sector.”

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