Gold prices near session highs after ISM Manufacturing PMI rises to 50.9 in January

NEW YORK (February 3) Gold is trading close to session highs after the latest data showed the U.S. manufacturing sector improving this month.

The Institute for Supply Management (ISM) announced on Monday that its Manufacturing Purchasing Managers Index rose to 50.9 in January after it posted a 49.3 reading in December. The headline number was higher than expected, as consensus forecasts looked for a rise to 49.8.

“U.S. manufacturing activity expanded in January after 26 consecutive months of contraction,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Demand clearly improved, while output expanded and inputs remained accommodative.”

Spot gold was trading at a session high of $2,830.75 just before the 10 am release, but pulled back slightly in the minutes afterward. Spot gold last traded at $2,825.91 per ounce for a gain of exactly 1.00% on the day.

The report’s components were mixed but largely positive. However, the ISM did note a sharp rise in inflation pressures with the Price Index shooting up to 54.9 against expectations for a 52.6 reading and following December’s 52.5 level. At the same time, the Production Index rose to 52.5, 2.6 points higher than December’s seasonally adjusted figure of 49.9.

The New Orders Index rose to 55.1, above the 52.8 level expected and up from the 52.5 reported in December. The ISM also noted an improvement in the labor market, with a return to expansionary territory. The Employment Index rose to 50.3, above expectations for a 47 reading and up from 45.4 the previous month.

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