Gold price drops following strong rise in U.S. ISM manufacturing data
(Kitco News) - The gold market is seeing renewed selling pressure as sentiment in the manufacturing sector pushed significantly higher in January, according to the latest data from the Institute for Supply Management (ISM).
Monday, the ISM said its manufacturing index rose to a reading of 50.9 up significantly from December's reading of 47.2%. The data also handily beat expectations as economists were calling for a reading of around 48%.
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.
The data shows that the manufacturing sector ended five-months in contraction territory. The better than expected economic data is having an impact on gold prices, which fell to session lows in initial reaction. February gold futures last traded at $1,571.60 an ounce, down 0.71% on the day.
According to the report, sentiment in the manufacturing sector improved as new orders increased in January.
The ISM said its New Orders Index rose to 52%, up from the previous reading of 47.6%. Meanwhile, the production index increased to 54.3%, up from December’s reading of 44.8%.
“Global trade remains a cross-industry issue, but many respondents were positive for the first time in several months,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.