Gold price sheds morning gains despite U.S. manufacturing PMI dropping to multi-month lows
New York (Jan 24) Gold reversed its early-morning gains after the release of preliminary manufacturing and service-sector sentiment data.
The flash U.S. manufacturing Purchasing Managers Index for January dropped to 55.0, marking a 15-month low, research firm IHS Markit said in its latest report. The January number missed the market’s expectations of a reading of 56.7.
“The health of the manufacturing sector improved to the least marked extent since October 2020 in January,” the IHS Markit’s news release stated. “Again, the headline figure was supported by a greater deterioration in vendor performance which would ordinarily be a signal of improving operating conditions. That said, supply chain issues abounded, which further hampered production and weighed on client demand.”
The service sector’s PMI reading fell to 50.9 in January, the lowest level in 18 months. “Labor shortages, employee absences and the Omicron wave reportedly weighed on growth,” the report said.
Any monthly reading above 50 points to an expanding sector, while anything below that shows contraction in activity.
The report pointed to the rise in Omicron cases as responsible for the slowdown in both the manufacturing and the service sectors.
“Soaring virus cases have brought the U.S. economy to a near standstill at the start of the year, with businesses disrupted by worsening supply chain delays and staff shortages, with new restrictions to control the spread of Omicron adding to firms’ headwinds,” IHS Markit chief business economist Chris Williamson. “Although supply chain delays continued to prove a persistent drag on the pace of economic growth, linked to port congestion and shipping shortages, the overall rate of supply chain deterioration has eased compared to that seen throughout much of the second half of last year.”
Gold prices fell following the PMI data. February Comex gold futures were last trading at $1,833.90, up 0.11% on the day, after hitting a daily high of $1,844 an ounce.
However, the reversal in the gold price Monday morning was largely attributed to the rise in the U.S. dollar index and a sell-off in crude oil, said Kitco’s senior analyst Jim Wyckoff.
KitcoNews
