Gold Lower After Strong US Manufacturing

Gold prices gave up mid-morning gains after the U.S. Institute for Supply Management said that its headline December manufacturing index climbed to 54.7% from 53.2% in November.

Consensus estimates compiled by news organizations called for the index to be somewhere around 53.5% to 53.8%.

As of 10:19 a.m. EST, Comex February gold was down $1.20 for the day to $1,150.050 an ounce. Three minutes ahead of the report, the metal had been at $1,155.10.

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.

Royce Mendes, of CIBC Capital Markets, pointed out that the monthly gain in the headline index was the fourth in a row and takes it to the highest level since the end of 2014.
“Importantly both the new orders and employment sub-indices were higher in December,” Mendes said. “Moreover, a relatively large advance in the prices-paid sub-index leaves the level at its highest since 2011 and suggests that inflationary pressures are building.”
The index for new orders jumped to 60.2% from 53.0%, while the production index climbed to 60.3% from 56.0%. The employment index edged up more modestly to 53.1% from 52.3%.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza