Gold prices holding on to gains despite strong rise in U.S. ISM manufacturing sentiment
(Kitco News) - The gold market is holding on to gains but is seeing little reaction to significantly better-than-expected sentiment in the U.S. manufacturing sector, according to the latest data from the Institute for Supply Management (ISM).
Monday, the ISM said its manufacturing index showed a reading of 59.3% for October, up from September’s reading of 55.4% and beating expectations. According to consensus forecasts, economists were expecting to see a reading of 55.6%.
According to reports, this is the highest positive reading in the survey since December 2018.
"“The manufacturing economy continued its recovery in October. Survey Committee members reported that their companies and suppliers continue to operate in reconfigured factories; with every month, they are becoming more proficient at expanding output," said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, in a statement.
The better than expected economic data is having little impact on gold in initial reaction. December gold futures last traded at $1,887.20 an ounce, up 0.52% on the day.
According to some economists and analysts, the strong recovery in the manufacturing sector bodes well for future economic growth.
“This is a fantastic reading and underscores just how strong the manufacturing sector has been coming out of the pandemic,” said Adam Button, chief currency strategist at Forexlive.com. “Obviously the market has much bigger things on its mind than this report but it shows that at least one part of the economy continues to accelerate.”
Looking at the components of the report, the ISM said that the New Orders Index rose to 67.9%, up from September’s reading of 60.2%. Meanwhile, the Production Index, increased to 63% up from the previous reading of 61%.
The labor market also saw healthy growth last month with the Employee Index rising to 53.2%, up from the September reading of 49.6%.
Positive for gold prices, inflation pressures are also on the rise. The Price Index rose to 65.5%, up compared to the September reading of 62.8%.