Editor’s note: The item has been updated to reflect the price changes.
(Kitco News) Gold prices fell first, but then managed to recover from daily lows after the global manufacturing index for the Institute for Supply Management fell below 50.0 but was still above expectations in March.
The ISM manufacturing index stood at 49.1% last month, exceeding market expectations by 45.0%.
The monthly decline for March marked a drop of 1.0 percentage point from the February reading of 50.1%.
Readings greater than 50% in such diffusion indices are seen as a sign of economic growth, and vice versa. The higher or lower an indicator is 50%, the greater or less the rate of change.
Gold prices fell further after publication, but then managed to recover from daily lows
Comex’s last gold futures contract for June was $ 1,601.30, up 0.31% on the day.
The employment index was 43.8% in March, down from 46.9% the previous month. The price index fell to 37.4% after reading 45.9% in February. The new orders index fell 7.6 percentage points to 42.2%, while the production index was down 2.6 percentage points to 47.7%.
The weakness in the manufacturing sector is expected to worsen as the effects of the coronavirus epidemic are felt in the United States. volatility in the energy market. The PMI has returned to contraction territory, and with a negative trajectory, “the report said on Wednesday.
The COVID-19 epidemic and oil price shocks have affected all manufacturing sectors, according to the March report.
“The coronavirus pandemic and shocks to the global energy markets have affected all manufacturing sectors … Transportation equipment and petroleum and coal products are the weakest sectors. The sentiment for short-term growth this month is strongly negative, at a 2: 1 ratio, “said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey committee.
Economists expect a much weaker release next month, saying the effects of the COVID-19 epidemic were not fully reflected in the March release.
“The main reason for the only modest drop in the composite index is that the measurement of supplier delivery times has increased, although this longer delivery time is clearly not a good thing in this case. Due to these details and the further weakening of the economy as the majority of responses have probably arrived, we expect the stock to weaken significantly next month towards the 42.8 mark which, according to ISM has been historically compatible with American recessions, “said Andrew Grantham, senior economist at CIBC Capital Markets.
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