Gold Prices Holding Steady As ISM Manufacturing Starts 2018 Strong
(Kitco News)- The gold market is holding on to positive gains after the manufacturing sector held firm at the start of the year, according to data from the Institute for Supply Management (ISM).
Thursday, the ISM said its manufacturing index showed a reading of reading 59.1 for January, well above economists' expectations but down compared to December's reading of 59.7%. Consensus forecasts were calling for a reading of 58.7%.
Readings above 50% in such diffusion indexes are seen as a sign of economic growth, and vice-versa. The farther an indicator is above or below 50%, the higher or smaller the rate of change.
Ahead of the report, gold prices were trading just down from session highs and have seen little reaction to the data. April gold futures last traded at $1,344.50 an ounce.
"Comments from the panel reflect expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in January," the report said.
While the headline index showed steady growth at the start of the year, the components of the report revealed broad-based weakness.
The report said that the New Orders Index dropped to a reading of 65.4%, down from December's reading of 67.4%; at the same time, the Production Index fell to 64.5%, down from the previous level of 65.2%.
The labor market also saw slower growth with the Employment Index coming in at 54.2%, down from December's reading of 58.1%.
Positive for gold, inflation pressures are picking up. The Price Paid Index increased to 72.7%, up from December's reading of 68.3%.
Avery Shenfeld, senior economist at CIBC World Markets, despite the ISM report as a non-event for markets.
"The ISM wasn't far enough from consensus to be a real market mover," he said.
By Neils ChristensenFor Kitco News
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