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(Kitco News) – According to the latest data from the Institute for Supply Management (ISM), the gold market is maintaining strong gains but seeing little reaction to weaker-than-expected sentiment in the manufacturing sector.
On Tuesday, the ISM said its manufacturing index showed a reading of 57.5% for November, down from October’s reading of 59.3%. The data was weaker than expected as consensus predictions called for a 57.9% reading.
Readings above 50% in such diffusion indices are seen as a sign of economic growth and vice versa. The more an indicator is above or below 50%, the higher or lower the rate of change.
The gold market is seeing little reaction to disappointing economic data as prices maintain gains of nearly 2% after bouncing off critical support. February gold futures were last trading at $ 1,813 an ounce, up 1.8% on the day.
Looking at some of the components of the report, the new orders index fell to a reading of 65.1%, down from the October reading of 67.9%.
The report showed renewed weakness in the US job market. The employment index fell to a reading of 48.4%, down from the previous reading of 53.2%.
“That’s good report, but that decline in employment in shrinking territory is a bit of a concern,” said Adam Button, Forexlive.com’s chief currency strategist.
For gold prices, inflationary pressure remains high with the price paid index falling to 65.4%, one tick less than the October reading of 65.5%.
Katherine Judge, senior economist at CIBC, said the latest report suggests slowing demand is infecting the manufacturing sector, which has generally shown greater resilience during the pandemic.
“Uncertainty about fiscal support is growing as some programs expire at the end of this year, coinciding with the prospect of large-scale closures and suggesting that there may be short-term challenges for the manufacturing sector, with a light shining all around. horizon as we approach vaccine distribution, “he said.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for loss and / or damage resulting from the use of this publication.
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