News Bites
Gold can't catch a break as prices down nearly 3% even after disappointing U.S. ISM data
(Kitco News) - Disappointing manufacturing data is not providing any bullish momentum for the gold market as it continues to be hit with massive selling pressure.
Monday, the Institute for Supply Management (ISM). said its manufacturing index showed a reading of 55.4% for April, down from March’s reading of 57.1%. The data was weaker than expected, as consensus forecasts were calling for a reading of around 57.5%.
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.
Although the manufacturing sector continues to expand, the report noted that this is the lowest reading since July 2020.
The gold market is ignoring the latest economic data as technical selling momentum dominates market sentiment, according to some analysts. June gold futures last traded at $1,859.90 an ounce, down 2.71% on the day.
The report noted that persistent inflation pressure and volatility in the labor market are impacting the manufacturing sector.
“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment. In April, progress slowed in solving labor shortage problems at all tiers of the supply chain. Panelists reported higher rates of quits compared to previous months, with fewer panelists reporting improvement in meeting head-count targets. April saw a slight easing of prices expansion, but instability in global energy markets continues,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee.
Looking at some of the components of the report, the New Orders Index dropped to 53.5%, down compared to the March reading of 53.8%. at the same time, the Production Index showed a reading of 53.6%, down from the previous figure of 54.5%.
The report noted that inflation pressures, while elevated, eased slightly with the Prices Index falling to 84.6%, down compared to the March figure of 87.1%.
Looking at the labor market the report said that the Employment Index dropped to 50.9%, down from 56.3% recorded in March.
