Gold rises on weak ISM data this morning. After drifting a bit lower early this morning on an equities rally, the yellow metal got a shot in the arm and the Dow took a hit when the ISM Manufacturing PMI dipped to 48.1 for November. That’s below an estimate of 49.4 and under October’s 48.3.
Gold initially rallied with the broader market as a measure of Chinese manufacturing rose to the highest level on record. The private Caixin/Markit manufacturing Purchasing Managers’ Index for November rose to 51.8. Numbers over 50 indicate expansion. The official figures from the National Bureau of Statistics rose to 50.2 in November from 49.3 in October and the highest level since April.
Investors have kept a close eye on Chinese manufacturing data this year to gauge the impact of the trade war with the U.S. and whether it would trigger a slowdown in Chinese expansion and the global economy. Those fears caused gold prices to skyrocket earlier this year. First-of-the-month U.S. manufacturing data is due out later Monday.
U.S. President Donald Trump has indicated that the country is close to a trade deal with China, but negotiations may have hit some snags. Axios reported Sunday that the deal is now “stalled because of Hong Kong legislation” passed by the U.S. Congress to back protesters against the Beijing-controlled government. Axios cited an unidentified person close to Trump’s negotiating team, who also said a phase-one accord probably wouldn’t happen before the end of the year at the earliest.
Gold futures for the most actively traded February contract slid 2.8% last month to settle at $1,472.70 an ounce Friday on Comex. U.S. financial markets were closed Thursday for the Thanksgiving Day holiday, with light trading Friday. Currently, the February contract is at $1,467.40.
A move through $1,456.60 will resume the downtrend, with the next support level at $1,453.10, according to a technical analysis from FXEmpire. A move through $1,486 will trigger an uptrend, it said. The main range for the yellow metal is $1,525.20 to $1,453.10, it said.
In other economic news this week, investors are awaiting the key monthly jobs report from the U.S. on Friday. The Federal Open Market Committee is scheduled to meet next week to decide on monetary policy. The CME FedWatch Tool showed a 93.4% probability that the Federal Open Market Committee would keep rates unchanged Dec. 11, while there were 6.6% odds on a hike. The central bank has cut rates at the past three meetings.
Silver rose dropped 5.3% in November and slid 0.2% last week. The March contract settled at $17.11 an ounce Friday on Comex. Spot platinum and spot palladium both increased last week. Platinum fell in November, while palladium rose.
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