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(Kitco News) – The gold market continues to fall to $ 1,800 an ounce as the U.S. manufacturing sector sees weaker-than-expected growth in June, according to the Institute for Supply Management ( ISM).
On Friday, the ISM said its index of manufacturing purchasing managers fell to a reading of 53%, below the May reading of 56.1. The data lost expectations as economists sought a decline to 54.6%.
The report said this is the lowest PMI reading since June 2020.
“The U.S. manufacturing sector continues to be fueled, albeit less in June, by demand, while being held back by supply chain constraints,” said Timothy Fiore, chairman of the Business Inquiry Committee. of ISM Manufacturing, in the report.
The gold market has been experiencing strong technical selling pressure after falling by $ 1,800 an ounce in stock overnight; however, disappointing US economic data is helping the precious metal recover some of its losses. August gold futures were last quoted at $ 1,795.70 an ounce, down 0.64% on the day.
Looking at some of the components of the index, the report says the index of new orders fell to 49.2%, below the previous level of 55.1%. At the same time, the production index rose a reading of 54.9%, below the May reading of 54.2%.
The report also highlighted a new contraction in the labor market. The employment rate fell to 47.3%, below 49.6% in May.
Not only is manufacturing losing momentum. The report highlighted a drop in inflationary pressures, which could be seen as negative for gold. The report said the price index fell to 78.5%, below the May reading of 82.2%.
Although the latest disappointing economic data raises the risk that the US economy will fall into recession; however, Andrew Hunter, senior American economist at Capital Economics, said the U.S. economy has room to slow without causing a recession.
“While the ISM index supports concerns that the Fed’s aggressive tightening will cause a sharp slowdown in the economy, the details suggest that the slowdown could lead to a faster fall in inflation than many now assume “, he said.
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