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(Kitco News) – According to the latest data from the Institute for Supply Management (ISM), the gold market is making strong profits, but sees little response to the slowing momentum in the US manufacturing sector.
The ISM said on Monday its non-manufacturing index showed a reading of 58.7% for January, up from 60.7% in December. The data was much weaker than expected, as consensus forecasts required a reading of 60%.
The report showed that the sector is still expanding although at a slower pace than expected. Readings of more than 50% in such diffusion indices are seen as a sign of economic growth, and vice versa. The further an indicator is above or below 50%, the greater or lesser the rate of change.
” The manufacturing economy continued to recover in January. The members of the survey committee reported that their companies and suppliers are still working in restructured factories, but absenteeism, short-term shutdowns for disinfecting facilities and problems returning and hiring workers are still causing tensions that limit the growth potential of manufacturing. , ”Says Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
Gold prices respond little to the latest economic data, as the market rises by almost 1% on the day. Gold futures in April last traded at $ 1,867.40 per ounce, up 0.92% on the day. According to some analysts, gold prices are being driven higher by a huge rise in silver prices, which has risen to a high of eight years.
If we look at some of the components of the report, the New Orders Index fell to a reading of 61.1%, compared to the reading of 67.5% in December. Meanwhile, the manufacturing index fell to 60.7%, up from 64.7% in December.
If we look at the labor market, the report said that the Employment Index rose to 52.6% compared to the previous reading of 51.7%.
Not only did the manufacturing sector lose momentum last month, but price pressure increased, which is positive for gold as a traditional inflation hedge. According to the report, the price index rose to 82.1%, compared to 77.6% in December.
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