Gold prices push closer to $1,800 as ISM shows drop in momentum in U.S. manufacturing sector
(Kitco News) - Gold prices are holding steady gains and pushing closer to $1,800 an ounce even as momentum in the manufacturing sector slows down slightly, according to the latest data from the Institute for Supply Management (ISM).
Monday, the ISM said its manufacturing index showed a reading of 60.7% for April, down from March’s reading of 64.7%. The data missed expectations as consensus forecasts were calling for a reading around 65.0%.
““The manufacturing economy continued expansion in April. Survey Committee Members reported that their companies and suppliers continue to struggle to meet increasing rates of demand due to coronavirus (COVID-19) impacts limiting availability of parts and materials,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee in a the report.
“Recent record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy. Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential,” he added.
Gold prices have seen some technical buying momentum through most of the morning and are holding on to its gains in initial reaction to the latest economic data. June gold futures last traded at $1,793.50 an ounce, up 1.47% on the day.
Looking at some of the component of the report, the New Orders Index fell to a reading of 64.3%, down from the March reading of 68%. At the same time the Production Index dropped to a reading of 62.5%, down from March’s level of 68.1%.
The data also showed lower momentum in the labor market. The Employment Index fell to a reading of 55.1%, down from the previous level of 59.6%.
Although momentum is slowing, inflation continues to rise. The report said that the Price Index rose t0 89.6%, up from the previous reading of 85.6%.