Gold price edges down as ISM Manufacturing Index beats expectations in December
(Kitco News) Gold prices ticked down as the headline manufacturing index from the Institute for Supply Management came in above expectations in December.
The ISM manufacturing index came in at 60.7% in December while market expectations were pricing in 56.6%. The monthly figure marked the highest level since 2018 and was a 3.2-percentage-point advance from November’s reading of 57.5%.
“This figure indicates expansion in the overall economy for the eighth month in a row after contracting in March, April, and May, which ended a period of 131 consecutive months of growth,” the report said.
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 down from daily highs. February Comex gold futures were last trading at $1,944.20, down 0.12% on the day.
The employment index advanced to growth territory, registering at 51.5% in December, up from November’s 48.4%.
The index for new orders rose to 67.9% from 65.1%, while the production index also advanced to 64.8% from 60.8% in November.
“All six of the biggest manufacturing industries — Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; Chemical Products; Petroleum & Coal Products; and Food, Beverage & Tobacco Products — registered moderate to strong growth in December,” the report said.
The manufacturing sector is holding up well in the face of the second COVID-19 wave and the new fiscal stimulus measures should help keep it that way, said CIBC Capital Markets economist Katherine Judge.
“The manufacturing sector continues to display its resilience during the second wave, and fresh fiscal support should help prop up demand until mass vaccination is closer to being achieved,” Judge said.