The US ISM manufacturing report for February just crossed the newswires, and the outcome was 50.1 vs. the 50.5 anticipated, and lower than the 50.9 prior.
The subcomponents show that production, new orders, and employment is contracting. Yet the latest reading of the ISM report, suggests that the US GDP is growing at 2.1% annualized.
Firms in the Computer and Electronic Products segment say the Lunar New Year shutdowns in China tend to create challenges for the sector. However, the Coronavirus has turned the situation worse than usual. Sellers of Chemical Products and Food, Beverages & Tabacco Products are also saying that the Coronavirus’s impact on China is a concern.
Within the first few seconds of the report being published, gold prices spiked higher. However, the price quickly retreated, as it looks like the ISM Manufacturing report was not as bad as many had feared. Over the weekend, the official China PMI manufacturing for China slumped to 35.7 from 50 prior and lower than the 46 anticipated. While private China Caixin Manufacturing PMI for February declined to 40.3 from 51.1 and smaller than the 45.7 anticipated.
Some market participants feared that the ISM manufacturing index would slump to similar horror figures like what we have seen in China; however, that was not the case.
Technically, the longer-term trend in gold prices remains upwards above the January 14 low of $1534.83, despite last week’s big slide in prices. The XAUUSD is also trading above the 200-day moving average at $1482.
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Coronavirus Cases Out of Control in Italy
The Coronavirus is still at large, and in Italy, coronavirus cases have risen fast in the last few days, which should support gold prices. As long as XAUUSD trades above the January 14 low of $1534.83, the gold price might be able to revisit the 2020-highs of $1688.80, however, on the price trading below the January 14 low, gold prices might be able to reach the 200-day moving average currently at $1482