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(Kitco News) – The gold market is maintaining strong gains, but seeing little reaction to the slowdown in the US manufacturing sector, according to the latest data from the Institute for Supply Management (ISM).
Monday, the ISM said its non-manufacturing index showed a reading of 58.7% for January, below the December reading of 60.7%. The data was much weaker than expected, since consensus predictions called for a 60% reading.
The report showed that the sector is still expanding, albeit at a slower pace than expected. Readings above 50% at these diffusion rates are seen as a sign of economic growth and vice versa. The further away an indicator is above or below 50%, the greater or lesser the rate of change.
““ The manufacturing economy continued to recover in January. Research committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term stoppages to sanitize facilities and difficulties in returning and hiring workers continue to cause tensions that limit growth potential manufacturing, ”said Timothy Fiore, chairman of the ISM Manufacturing Business Research Committee.
Gold prices are seeing little reaction to the latest economic data, as the market is seeing gains of almost 1% for the day. Gold futures in April were last traded at $ 1,867.40 an ounce, up 0.92% on the day. According to some analysts, gold prices are being driven by a massive increase in silver prices, which have risen to an eight-year high.
Looking at some of the report’s components, the New Orders Index fell to a reading of 61.1%, down from the December reading of 67.5%. Meanwhile, the Production Index fell to 60.7%, below the December reading of 64.7%.
Looking at the labor market, the report reports 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 pressures are increasing, which is positive for gold as a traditional hedge against inflation. The report said the Price Index rose to 82.1%, compared with December’s reading of 77.6%.
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