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Gold prices fall to session lows after ISM Manufacturing PMI improves to 49% in September

Monday morning temperature

Monday October 02, 2023 10:17
Ernest Hoffman

(Kitco News) - Gold prices are setting new session lows after the latest data on the U.S. manufacturing sector showed it improved beyond expectations, but still contracted for the eleventh consecutive month.

The Institute for Supply Management (ISM) manufacturing index came in at 49% for September, after posting a 47.6% print in August. Market consensus calls were expecting a reading of 47.9%.

Readings above 50% in such diffusion indexes signify economic growth and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.

Following the release, gold prices declined to fresh lows on the session. Spot gold last traded at $1,830.25, down exactly 1.00% on the session.

The employment index rose into expansionary territory at 51.2% in September after a 48.5% reading in August. The index for new orders remained in contractionary territory, but improved to 49.2% from August’s 46.8% print.

The prices index also surprised, falling 4.6 percentage points in September to 43.8 from August’s figure of 48.4%.

“The U.S. manufacturing sector continued its contraction trend but at a slower rate, recording its best performance since November 2022, when the PMI also registered 49 percent,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Companies are still managing outputs appropriately as order softness continues, but the month-over-month PMI improvement in September is a clear positive.”

Fiore noted that two of the six biggest manufacturing industries, Food, Beverage & Tobacco Products; and Petroleum & Coal Products, registered growth in September.

“Demand remains soft, but production execution improved compared to August as panelists’ companies prepared for the fourth quarter and the close of the fiscal year,” he said. “Suppliers continue to have capacity. Seventy-one percent of manufacturing gross domestic product (GDP) contracted in September, up from 62 percent in August. More importantly, the share of sector GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 6 percent in September, compared to 15 percent in August and 25 percent in July, a clear positive.”
https://www.kitco.com/news/2023-10-02/Gold-prices-fall-to-session-lows-after-ISM-Manufacturing-PMI-improves-to-49-in-September.html