(Kitco News) – The gold market is struggling to find momentum to push through $1,300 an ounce as sentiment in the U.S. manufacturing sector improved last month, according to the latest report from the Institute for Supply Management (ISM).
Thursday, the ISM Purchasing Managers Index rose to a reading of 55.3 in March, following February’s reading of 54.2%.
Readings above 50% in such diffusion indexes are seen as a sign of economic growth, and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.
Gold prices have seen a little movement in initial reaction to the latest economic data as prices hover slightly below $1,300 an ounce. June gold futures last traded at $1,298 an ounce, relatively unchanged on the day.
The components of the report showed broad-based strength. The New Orders Index rose to 57.4%, an increase of 1.9 percentage points from the February reading of 55.5%. Meanwhile, the Production Index showed a reading of 55.8T, a 1-percentage point increase compared to the previous reading of 54.8%.
Looking at the labor market, the Employment Index rose to 57.5%, an increase of 5.2 percentage points from the February reading of 52.3%.
“Comments from the panel reflect continued expanding business strength, supported by gains in new orders and employment,” the report said.
The report was also modestly positive for gold prices as it showed a rise in inflation pressures. The Prices Index rose to 54.3%, a 4.9-percentage point increase from the February reading of 49.4%, indicating a return of increasing raw materials prices after a two-month respite.
“Overall, inputs continue to reflect an easing business environment, but to a lesser extent than in February, confirmed by the Prices Index returning to expansion,” the report said.
Avery Shenfeld, said that the latest manufacturing data should support the U.S. dollar, which could weigh on gold prices.
“Overall, the index is only a bit shy of its six month average, and the new orders component is actually above the 6 month mean,” he said.
By Neils Christensen
For Kitco News