(Kitco News) - The gold market saw a spike in prices after the latest data showed the U.S. manufacturing sector falling deeper into contractionary territory last month.
The Institute for Supply Management (ISM) announced on Thursday that its U.S. manufacturing index fell to 46.8% in July, compared to June’s reading of 48.5%. The data was lower than expected, as consensus forecasts looked for a slight improvement to 48.8.
“U.S. manufacturing activity entered deeper into contraction,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Demand was weak again, output declined, and inputs stayed generally accommodative.”
Readings above 50% in such diffusion indexes signify economic growth and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.
The gold market shot to fresh highs following the manufacturing data, with spot gold topping out at $2,462.32 in the minutes after the 10 am EDT release. It last traded at $2,449.65 per ounce for a slight gain of 0.08% on the session.
The components of the report also showed a deterioration on balance. The New Orders Index slipped further into contractionary territory with a 47.4% print, 1.9% lower than the 49.3% recorded in June, while the Employment Index registered 43.4%, down 5.9 percentage points from June’s 49.3% level.
“The Supplier Deliveries Index indicated slowing deliveries, registering 52.6 percent, 2.8 percentage points higher than the 49.8 percent recorded in June,” Fiore said. “The Inventories Index registered 44.5 percent, down 0.9 percentage point compared to June’s reading of 45.4 percent.”
Inflation pressures also ticked up, with the Prices Index coming in at 52.9% compared to the reading of 52.1% in June.
