Summary:

• Gold prices hit 6 week high following ISM release
• The US manufacturing index fell to 56.3 vs 57.8 prior
• Report not all bad for USD though with prices rising more than expected

The ISM manufacturing index for July has come in marginally lower than forecast with a reading of 56.3 just below the consensus expectation of 56.4. The figure was lower than the 57.8 seen last time out but on the whole it is still a fairly robust print, coming in higher than the April and May releases for instance. 

 Yesterday’s miss in the Chicago PMI served as a harbinger for the ISM number. It should be pointed out however that today’s print was only marginally lower 

As well as the headline print the report also contains several other pieces of data that are of interest. Firstly the prices paid rose to 62.0 from 55.8 expected in what is a positive development for inflation and could be seen as supportive of a USD recovery. On the other hand the new orders fell to 60.4 from 63.5 prior and the employment component also declined from 57.2 prior to 55.2 – this could be worth remembering for Friday’s NFP release.

Overall the data is mildly negative for the US dollar but given the protracted declines of late there is some doubt as to whether this news will have a prolonged negative impact on the buck. Due in part, to some USD weakness and also a quick swoon seen in the US100 in the past 15 minutes Gold prices have risen with buyers pushing the precious metal above 1270 to a 6 week high. Lately crosses between the 8 and 21 EMA on D1 have been good buy and sell signals in Gold and since the bullish cross (8 above 21) two weeks ago the market has continued to rise. 1280 and 1295 are levels ot watch on the upside if price continues to rally.

 

 Gold has risen to a 6 week high after the ISM release. The recent uptrend, shown by the 8 and 21 day EMAs remains in tact. 1280 and 1295 levels to watch should the rise continue.