US Manufacturing Surges; Gold Faces Downward Pressure
US manufacturing activity strengthened further in July. The ISM Manufacturing PMI surged to 55.6—its highest level since May 2022—up from 53.3 and surpassing market expectations of 54.0.
This growth was driven by a spike in production to 58.5, improved new orders, and the first increase in employment since September 2023. Consumer demand, business investment, and government defense spending also supported the expansion in factory activity.
Raw material price pressures remain high. The ISM price index fell from 73.0 to 71.1 but stayed above the forecast of 70.0. These conditions indicate that cost inflation is beginning to ease, though not yet enough to alleviate the Federal Reserve's concerns.
Data exceeding expectations could drive up the US dollar and Treasury yields, as the economy appears resilient enough to withstand high interest rates. Markets might also reassess the likelihood of rate hikes if price pressures persist.
These ISM results tend to be negative for gold. A stronger dollar and rising yields could push prices to test the $4,020–$4,000 support level. However, since the price index declined from the previous month, selling pressure may be limited. Gold needs to break back above the $4,050–$4,060 range to pave the way for a rebound.
Source: Newsmaker.id
