(Kitco News) - Gold is trading near the $3,220 per ounce level after the latest data showed the U.S. manufacturing sector declining less than expected last month.
The Institute for Supply Management (ISM) announced on Thursday that its Manufacturing Purchasing Managers Index fell to 48.7 in April after it posted a 49 reading in March. The headline number was better than expected, as consensus forecasts looked for a reading of 48.
“In April, U.S. manufacturing activity slipped marginally further into contraction after expanding only marginally in February,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Demand and output weakened while input strengthened further, conditions that are not considered positive for economic growth.”
Spot gold continued to trade near the lower edge of its range on the session in the minutes after the 10 am EDT release. Spot gold last traded at $3,223.23 per ounce for a loss of 1.97% on the day.
The report’s components were mixed. The ISM noted a sharp rise in inflation pressures, with the Price Index rising to 69.8, up from 69.4 in March. At the same time, the Production Index fell to 44, 4.3 points lower than the 48.3 posted the previous month.
The New Orders Index rose to 47.2, up from the 45.2 reported in March. The ISM also noted improvement in the labor market, with the Employment Index rising to 46.5 from 44.7 the previous month.
“Factory output (production) contracted further in April, indicating that panelists’ companies are continuing to revise production plans downward in the face of economic headwinds,” Fiore said. “The Employment Index ticked up but remained in contraction, as panelists’ companies continued to release workers. Companies generally opted for layoffs because they are quicker to implement than attrition.”
“Inventory growth is not a positive sign when demand is moving in the opposite direction; the recent expansion is considered a temporary move to avoid tariffs, and levels will decline when such trade issues are resolved,” he added. “Supplier delivery performance reflects this pull-forward activity and delays in clearing goods through ports of entry.”
