Gold hits daily lows as ISM Manufacturing Index surprises on the upside
(Kitco News) Gold prices hit daily lows as the headline manufacturing index from the Institute for Supply Management rose back up above 50, beating expectations in June.
The ISM manufacturing index came in at 52.6% last month, beating market expectations of 49.5%.
June’s monthly increase marked a 9.5-percentage-point advance from May’s reading of 43.1%.
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.
Following the release, gold prices edged up and then reversed back down to hit daily lows on more profit-taking. The August Comex gold futures were last trading at $1,775.60, down 1.38% on the day. Overnight, gold hit 8.5-year high and traded above the $1,800 an ounce level.
The employment index was at 42.1% in June, up from 32.1% in the prior month. The prices index rose to 51.3% following May’s reading of 40.8%.
The index for new orders jumped 24.6 percentage points to 56.4%, while the production index was up 24.1 percentage points at 57.3%.
Food, Beverage & Tobacco Products sector remained the best performer in June.
June saw growth recover after three consecutive months of disruptions caused by the COVID-19 outbreak, said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
“June signifies manufacturing entering an expected expansion cycle after the disruption caused by the coronavirus (COVID-19) pandemic. Comments from the panel were positive (1.3 positive comments for every one cautious comment), reversing the cautious trend which began in March. The manufacturing sector is reversing the heavy contraction of April, with the PMI® increasing month-over-month at a rate not seen since August 1980, with several other indexes also posting gains not seen in modern times,” Fiore said.