Gold Lower After Strong US Manufacturing

Gold prices gave up mid-morning gains after the U.S. Institute for Supply Management said that its headline December manufacturing index climbed to 54.7% from 53.2% in November.

Consensus estimates compiled by news organizations called for the index to be somewhere around 53.5% to 53.8%.

As of 10:19 a.m. EST, Comex February gold was down $1.20 for the day to $1,150.050 an ounce. Three minutes ahead of the report, the metal had been at $1,155.10.

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 greater or smaller the rate of change.

Royce Mendes, of CIBC Capital Markets, pointed out that the monthly gain in the headline index was the fourth in a row and takes it to the highest level since the end of 2014.
“Importantly both the new orders and employment sub-indices were higher in December,” Mendes said. “Moreover, a relatively large advance in the prices-paid sub-index leaves the level at its highest since 2011 and suggests that inflationary pressures are building.”
The index for new orders jumped to 60.2% from 53.0%, while the production index climbed to 60.3% from 56.0%. The employment index edged up more modestly to 53.1% from 52.3%.

via Kitco

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