Editor's Note: The article was updated to reflect shifting gold prices.
(Kitco News) - Better than expected data from the U.S. manufacturing sector is starting to weigh on the gold market as prices fall below $1,900 an ounce in delayed reaction.
Tuesday, the Institute for Supply Management (ISM) said its manufacturing Purchasing Managers Index (PMI) showed a reading of 61.2% for May, up from April’s reading of 60.7%. The data was better than expected, as consensus forecasts called or a roughly unchanged reading.
“This figure indicates expansion in the overall economy for the 12th month in a row after a contraction in April 2020,” the report said.
The gold market was trying to hold on to $1,900 but has been unable that new support level in the face of better than expected data. As of 10:52 am ET, August gold futures last traded at $1,895.60 an ounce, down 0.5% on the day.
Along with the growth in the headline number, the report said that the New Orders Index rose to 67%, up from April’s reading of 64.3%.
However, there are some dark economic clouds forming on the horizon as the national manufacturing sector is experiencing some labor issues. The report said that the Employment Index dropped to a reading of 50.9, down from April’s reading of 55.1%.
Some companies in the survey said that the labor shortage is impacting their ability to meet the growing demand.
“Panelists companies and their supply chains continue to struggle to respond to strong demand due to the difficulty in hiring and retaining direct labor. Record backlog, customer inventories and raw material lead times are being reported. The manufacturing recovery has transitioned from first addressing demand headwinds, to now overcoming labor obstacles across the entire value chain,” says Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
The report also noted a drop in inflation pressures even as they remain at extremely elevated levels. The Prices Index fell to a reading of 88, down from April’s reading of 88.9.
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June 01, 2021 at 09:04PM
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Gold price holding on to $1900 following rise in ISM Manufacturing PMI - Kitco NEWS
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