(Kitco News) - The gold market is trading near session highs as the U.S. manufacturing sector continues to experience slower activity, with durable goods orders falling more than expected.
The Commerce Department announced on Wednesday that U.S. durable goods orders dropped by 2.2% last month, following November’s revised decrease of 2%. The data was worse than expected, as economists had anticipated a 0.3% increase.
Core durable goods, which exclude the volatile transportation sector, rose by 0.3% last month, meeting expectations.
The gold market continues to recover from Monday’s selloff, which saw the precious metal caught in a liquidity trap due to a significant decline in U.S. equity markets. Spot gold is trading near session highs following the disappointing economic data, last trading at $2,749.30 an ounce, up 0.32% on the day.
Thomas Ryan, North America Economist at Capital Economics pointed out that the drop in December’s headline number was due to manufacturing and labor issues at Boeing. However, he added that despite stable core data, activity continues to soften.
“While real underlying capital goods shipments probably rose last quarter, the plunge in non-defence aircraft shipments suggests that overall business equipment investment declined,” he said. “The post-election surge in small business confidence suggests that we could see a pick-up in the first half of next year, although elevated corporate borrowing costs will continue to be a headwind for firms looking to invest.”
