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(Kitco News) – According to the latest data from the Institute for Supply Management (ISM), the gold market continues to rally, but there is little reaction to the slowing momentum in the US manufacturing sector.
On Monday, the ISM said its non-manufactured index for January showed a value of 58.7%, down from its December reading of 60.7%. The data was much weaker than expected as consensus predictions required a 60% reading.
The report found that the sector is still growing, albeit at a slower pace than expected. Measurements 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 less the rate of change.
“The manufacturing economy continued its recovery in January. Members of the committee of inquiry reported that their businesses and suppliers continue to operate in reconfigured factories, but absenteeism, momentary shutdowns to decontaminate facilities and difficulties in returning and hiring workers continue to create tensions limiting the growth potential of production, ”said Timothy Fiore, Chairman of the ISM Manufacturing Business Survey Committee.
Gold prices are unresponsive to the latest economic data as the market is showing almost 1% profit per day. April’s gold futures last traded at $ 1,867.40 an ounce, up 0.92% one day. According to some analysts, gold prices are led higher by a massive rise in silver prices, which have risen to an eight-year high.
Looking at some of the components of the report, the New Orders Index fell to 61.1%, down from 67.5% in December. Meanwhile, the manufacturing index fell to 60.7%, down from its December reading of 64.7%.
Looking at the labor market, the report said the employment index rose to 52.6%, up from the previous reading of 51.7%.
Not only did the manufacturing sector lose momentum last month, but price pressures are also mounting, which is positive for gold as a traditional inflation hedge. The report said the price index rose to 82.1%, up from the December stand of 77.6%.
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