Gold has started the week with considerable losses. Spot gold is trading at $1222.08 per ounce, down 1.56% on the day. On the release front, today’s key event is ISM Manufacturing PMI. The index climbed to 57.8 in June, beating the estimate of 55.0. On Tuesday, US markets are closed for the Fourth of July holiday.
Gold prices continue to sag, and the metal dropped to $1220 earlier in the day, its lowest level since May 11. Gold is down 4.4% since Thursday, when the metal appeared headed to break above the symbolic $1300 level. The week started with good news from the manufacturing sector, as ISM Manufacturing PMI improved to 57.8, its highest level since November 2014. Global economic conditions have improved, and a stronger demand for US exports has boosted the manufacturing sector.
The US economy did indeed slow down in the first quarter, but the downturn was not as bad as feared. On Thursday, revised GDP reading was raised to 1.4%, better than the initial estimate of 1.2% in May. The improvement was attributed to stronger consumer spending and an increase in exports. Earlier in the year, the markets were braced for a very poor quarter, with the first estimate in April projecting a gain of only 0.7%. Inflation remains stubbornly low, and consumer spending is also soft, despite high consumer confidence levels. In May, Personal Spending softened to 0.1%, down from 0.4% a month earlier. If inflation levels don’t show some improvement, the Federal Reserve may have second thoughts about a December rate hike.
