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Gold price holding around $1,650 as ISM manufacturing survey falls to 50.2 in October

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(Kitco News) - Activity in the U.S. manufacturing sector continues to slow but remained in expansion territory in October, according to the latest data from the from Institute for Supply Management (ISM); activity last month fell relatively in line with market expectations.

The gold market is not seeing much reaction to the latest economic data as prices continue to trade around $1,650 an ounce.

Tuesday, the ISM said its Manufacturing Purchasing Managers Index, fell to 50.2 in October, down from September’s reading of 50.9%. Economists were looking for a drop to 50.0.

The gold market is seeing some buying momentum Tuesday but is not reacting to economic data. December gold futures last traded at $1,648.20 an ounce, up 0.46% on the day.

Looking at some of the components of the report, the New Orders Index remained in contraction territory at 49.2%, up slightly from September’s reading at 47.1%. Meanwhile the production Index rose to 52.3%, up from the previous reading at 50.6.

The report also noted that inflation pressures continue to ease with the Prices Paid Index falling to 46.6%, down sharply from September’s reading at 51.7%. “This is the index’s lowest reading since May 2020,” the report said.

Although momentum is slowing, Katherine Judge, senior economist at CIBC said that it’s not enough for the Fed to slow its aggressive monetary policy tightening.

“Although the weakness in new orders suggests a slowdown in production ahead, the Fed is looking for broader signs of a slowdown in activity, which the other components didn't deliver,” she said.

Andrew Hunter, senior U.S. economist at Capital Economics said that weak manufacturing should continue to weigh on U.S. economic growth.

“While the relationship is no longer as close as it once was, the headline index is also broadly consistent with GDP growth of zero,” he said.

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