Gold Prices Above $1,230 After ISM Manufacturing Index Misses Expectations
(Kitco News) - Gold prices ticked up and were trading near daily highs after the headline manufacturing index from the Institute for Supply Management missed expectations and came in at 57.7% in October.
Market consensus called for the index to come in at 59%. October’s monthly decrease marked a 2.1-percentage point drop from September’s reading of 59.8%.
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.
Following the release, gold prices remained above the $1,230 an ounce level, with the December Comex gold futures last trading at $1,232.10, up 1.41% on the day.
Gold made gains early on Thursday as traders bought the dip in prices, according to Kitco’s senior technical analyst Jim Wyckoff. The yellow metal was also supported by a decline in the U.S. dollar index, which hit a 16-month high on Wednesday.
“Technically, gold bulls and bears are on a level overall near-term technical playing field. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the October high of $1,246.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,200.00,” Wyckoff said in his AM Roundup.
The employment index was at 56.8% in October, down from 58.8% in the prior month, while the prices index rose 4.7 percentage points to 71.6%.
Also, the index for new orders saw a 4.4-percentage point drop to 57.4%, while the production index declined 4 percentage points to 59.9%.
After analyzing the October data, economists noted that despite missing expectations, the U.S. manufacturing sector was still in a “heathy” expansion mode.
“The 57.7 reading, while down from 59.8 in September, is still elevated by historical standards. Key readings for new orders, employment and production are all comfortably above 55. Prices paid picked up to 71.6 indicating broad-based increases, perhaps capturing some of the tariff-war impacts for some supplies …We wouldn’t read much into the slight miss on the ISM given the level that the series is still at,” CIBC Capital Markets chief economist Avery Shenfeld.