News Bites
Gold Prices Holding Near 2-Month Highs After U.S. ISM Manufacturing Survey Falls In May
(Kitco News) - Gold prices are holding near a two-month high as the sentiment in the U.S. manufacturing sector fell closer to contraction territory last month, according to the latest data from the Institute for Supply Management (ISM).
Monday, the ISM said its manufacturing index showed a reading of 52.1% for April, down from April's reading of 52.8%. The data was weaker than expected as consensus forecasts were calling for a reading of 53.0%.
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.
Gold prices were solidly positive ahead of the report but has seen little reaction to the weaker-than-expected numbers. August gold futures last traded at $1.321.50 an ounce, up 0.80% on the day. The gold market is back above $1,300 as recession fears surge through financial markets, keeping U.S. bond yields nearly a two-year low. The U.S. dollar is also under pressure, trading near a one-week low.
The components of the report showed a relatively mixed picture on the health of the manufacturing sector. The New Orders Index increased to 52.7%, up from the previous reading of 51.7%; meanwhile, the Production Index fell to 51.3%, down from April’s reading of 52.4%.
The labor market was also relatively healthy with the Employee Index rising to 53.7%, up from April’s reading of 52.4%.
Inflation pressures ticked modestly higher, with the Price Index increasing to 53.2%, up from April’s reading of 50%.
Katherine Judge said that the further drop in the manufacturing sector suggests that investors shouldn’t expect to see a surge in activity in the months ahead.
“Overall, the data weren't a big market mover, given more pressing trade issues that remain unresolved,” she said.
