(Kitco News) - The gold market continues to benefit from solid short covering, but it could start to see some safe-haven inflows as the latest economic data shows activity in the U.S. manufacturing sector could a significant hit in January.
Tuesday, the Commerce Department said that U.S. durable goods orders dropped 6.1% last month, following December’s downwardly revised 0.3% decline. The data was significantly weaker than expected as economists were looking for a decline of 4.9%.
Core durable goods, which strips out the volatile transportation sector fell 0.3% in January, also missing expectations. Consensus forecasts were looking for a 0.2% increase in core orders.
Meanwhile, non-defense capital goods orders, excluding airplane manufacturing increased 0.1%, rising in line with expectations. However, December’s components were revised down to -0.6%.
The gold market is not seeing much reaction to the disappointing economic data; April gold futures last traded at $2,046.80 an ounce. However, some market analysts have said signs of a weakening economy will continue to support the precious metal.
Adam Button, head of currency strategy at Forexlive.com, said that the disappointing durable goods numbers are expected to weigh on first-quarter GDP forecasts.
