Renowned Kitco analyst Neils Christensen cites a development that has the potential to affect the price of Gold today.
According to the latest data from the Institute for Supply Management (ISM), the gold market has strong gains but has little response to the slowing momentum in the US manufacturing sector.
The ISM announced on Monday that the non-manufacturing index showed a reading of 58.7% for January, which means a decrease from the 60.7% reading in December. The data was much weaker than expected, as the consensus estimates required a 60% reading.
The report showed that the industry continues to grow, albeit slower than expected. Readings above 50% in such diffusion indexes are seen as a sign of economic growth. The more an indicator is below or above 50%, the greater or smaller the rate of change.
Gold prices show little reaction to the latest economic data because the market is seeing an increase of about 1% during the day. April gold futures were traded at $ 1,867.40 per ounce, with an increase of 0.92% on the latest day. Gold prices are rising with a massive rise in silver prices to an eight-year high, according to some analysts.
Looking at some components of the report, the New Orders Index fell to 61.1% from the 67.5% reading in December. Meanwhile, the Production Index fell to 60.7% from a reading of 64.7% in December.
Looking at the labor market, the report said that the Employment Index rose to 52.6% from the previous reading of 51.7%.
Not only has the manufacturing sector lost momentum last month, but also price pressures are growing. This is positive for gold as a traditional inflation protection. In the report, it was stated that the Price Index rose to 82.1% compared to 77.6% in December.