(Kitco News) - While off its highs, the gold market is still holding solid gains near record levels as activity in the U.S. manufacturing sector continues to contract.
The Institute for Supply Management (ISM) reported Wednesday that its Manufacturing Purchasing Managers Index (PMI) rose slightly to 49.1 in September, up from August’s reading of 48.7. The headline number increased roughly in line with expectations.
Despite the modest improvement, the ISM noted this was the seventh consecutive month the manufacturing sector remained in contraction territory. A reading above 50 indicates growth, while a reading below 50 signals contraction.
“Looking at the manufacturing economy, 67 percent of the sector’s gross domestic product (GDP) contracted in September, down from 69 percent in August. Twenty-eight percent of GDP is strongly contracting (registering a composite PMI of 45 percent or lower), up from 4 percent in August,” said Susan Spence, Chair of the ISM Manufacturing Business Survey Committee.
The gold market is not showing a significant reaction to the weak economic data. Spot gold last traded at $3,870.20 an ounce, up 0.32% on the day.
Looking at the report’s components, new orders fell to 48.9, down from August’s reading of 51.4. At the same time, the Production Index rose to 51, up from 47.8 in the previous month.
On a positive note, the report highlighted an improvement in the labor market. The Employment Index increased to 45.3, up from August’s reading of 43.8.
The report also indicated that as activity contracts, price pressures are easing. The Price Index fell to 61.9, down from 63.7 in August.
