Gold prices come off session lows after ISM Manufacturing PMI rises to 47.4% in December

(Kitco, Wed. Jan 3rd, 2024) –

Gold prices rose from session lows after the latest data on the U.S. manufacturing sector showed it improved more than expected, but still remained in contractionary territory.

The Institute for Supply Management (ISM) manufacturing index came in at 47.4% for December, after posting a 46.7% print in November. The data was better than forecast, as market consensus calls were expecting a reading of 47.1%.

Readings above 50% in such diffusion indexes signify economic growth and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.

Gold prices were trading at session lows around $2,032 per ounce just before the release, but rose to $2,047.64 in the minutes after the ISM data was published. Spot gold last traded at $2,037.95, down 1.02% on the session.

The employment index rose to 48.1% in December after a 45.8% reading in November, while the index for new orders fell to 47.1% from November’s 48.3% print.

The prices index also surprised, falling 4.7 percentage points in December to 45.2 from November’s figure of 49.9%. Economists were expecting a reading of 47.5.

“The U.S. manufacturing sector continued to contract, but at a slightly slower rate in December as compared to November,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Companies are still managing outputs appropriately as order softness continues. Demand eased, with the New Orders Index contracting at a faster rate, New Export Orders Index essentially flat, and Backlog of Orders Index climbing back above 40 percent but still in fairly strong contraction territory. The Customers’ Inventories Index returned to contraction, becoming more accommodative for future production.”

Fiore noted that none of the six biggest manufacturing industries registered growth in December.

“Demand remains soft, and production execution is stable compared to November, as panelists’ companies continue to manage outputs, material inputs and labor costs,” he said. “Suppliers continue to have capacity. Eighty-four percent of manufacturing gross domestic product (GDP) contracted in December, up from 65 percent in November. More importantly, the share of sector GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 48 percent in December, compared to 54 percent in November and 35 percent in October.”

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com