Gold prices continue to test resistance at $3,500 as ISM Manufacturing PMI rises to 48.7

NEW YORK (November 2) The gold market continues to test critical resistance near $3,500 an ounce, supported by safe-haven demand as activity in the U.S. manufacturing sector continues to contract.

The Institute for Supply Management (ISM) announced on Tuesday that its Manufacturing Purchasing Managers Index (PMI) dropped to 48.7 in August, up from July’s reading of 48. The headline number rose in line with expectations.

Despite the small improvement, the ISM noted that this was the sixth consecutive month the manufacturing sector has been in contraction territory.

A reading above 50 indicates growth in the manufacturing sector, while a reading below 50 signifies contraction.

“In August, U.S. manufacturing activity contracted at a slightly slower rate, with new orders growth the biggest factor in the 0.7-percentage point gain of the Manufacturing PMI. However, since production contracted at a rate nearly equal to the expansion in new orders, the Manufacturing PMI increase was nominal,” said Susan Spence, Chair of the ISM Manufacturing Business Survey Committee, in the report.

The gold market is not seeing any significant momentum in initial reaction to the manufacturing data; however, prices continue to hold solid gains from Friday’s rally and remain in striking distance of its overnight record highs above $3,500 an ounce. Spot gold last traded at $3,490.30 an ounce, up 0.5% on the day.

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