On September 3, the international gold price fluctuated violently. After the opening of the day, it was US$33. By the end of the day, the gold futures of the New York Mercantile Exchange opened at US$2,536 per ounce. Then it fell over US$30 for a time, but then rebounded and strengthened, continuing to rebound, and by the end of the day, it was hovering around US$2,524 per ounce. .
In this regard, analysts at Commerzbank said that U.S. Treasury bond yields fell significantly after the release of the latest data from the Institute for Supply Management (ISM), which became an important driving force for the rebound in gold prices.
On September 3, ISM announced the U.S. Manufacturing Purchasing Managers Index (PMI) for August. Data show that the U.S. manufacturing PMI was 47.2 in August. Although it rebounded slightly from 46.8 in July, it was still below the 50 threshold that divides prosperity and contraction for the fifth consecutive month and was in the contraction range. This also means that U.S. manufacturing remains in a state of slowdown.
Looking at specific sub-indexes, the ISM manufacturing new orders index fell to 44.6, the lowest level in 15 months; output fell further, with the production sub-index falling to 44.8; export orders also recorded the fastest growth since the beginning of this year degree of shrinkage.
While orders are sluggish and manufacturing activity continues to shrink, U.S. manufacturers are also facing rising prices for input products, with the ISM raw material price index rising to a nearly three-month high of 54. It’s another sign that U.S. inflation, while well below its mid-2022 highs, still has an inflation problem. ISM pointed out that this may be due to the surge in freight rates.
After the ISM manufacturing PMI index was released, S&P market analysts said that the market’s concerns about the U.S. economy have rekindled. “The further decline in the manufacturing PMI index indicates that the manufacturing industry is exerting an increasing drag on the U.S. economy in the middle of the third quarter.” “Forward-looking indicators suggest this drag may intensify in the coming months.”
The economic data also raised the possibility of a sharp interest rate cut by the Federal Reserve at its monetary policy meeting later this month. The Chicago Mercantile Exchange’s “Fed Watch Tool” shows that after the release of the ISM report, market expectations that the Federal Reserve will further cut interest rates by 50 basis points has increased to 39%.
Looking ahead to the market outlook, based on concerns about the U.S. economy and expectations for the Federal Reserve to cut interest rates, analysts at Commerzbank believe that gold prices are likely to rise further. “If the U.S. employment report to be released later this week shows significant weakness, concerns about the U.S. Speculations of a recession and faster interest rate cuts will resurface, which will further support gold prices.”