Gold price drops after rising ISM manufacturing sentiment

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(Kitco News) – The gold market briefly entered negative territory and is under technical pressure to sell as sentiment in the U.S. manufacturing sector improves more than expected in August, according to the latest data from the Institute for Supply Management (ISM).
On Tuesday, the ISM said its manufacturing index posted a reading of 56% for August, down from 54.2% in July. The data was better than expected as economists expected to see a relatively unchanged reading at 54.6%, according to the consensus forecast.
According to the report, this is the highest sentiment reading since November 2018.
Better than expected economic data appears to weigh on gold in the initial reaction. December gold futures last traded at $ 1,979 an ounce, relatively unchanged on the day.
Not only did the headline numbers beat expectations, but the report’s components showed strong growth. The report says new orders rose to 67.6%, from 61.5% in July. This is the highest reading since 2004.
The manufacturing labor market also improved with the employment index rising to 46.4%, up from the previous level of 44.3%.
However, the gold market was positive, with the report pointing to a sharp rise in inflationary pressures. The price paid index rose to 59.6%, from 53.2% in July.“Overall, the survey still suggests that the manufacturing industry in the United States is rebounding a little faster after the lockdown than we initially expected,” said Andrew Grantham, senior economist.

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