Gold shot up after another batch of negative U.S. data came out. On the New York Mercantile Exchange, gold futures for July traded at $1 405,65 at 14:05 GMT, up 0,91% on the day.
The ISM Manufacturing index mismatched predictions by 1.7% and plunged below the neutral level of 50. The value for May stands at 49, significantly below the 50,7 reading for the previous month and the forecast of 50,7.
The Construction Spending indicator for April showed a more positive value, but still missed preliminary estimates. The indicator was supposed to reach 1.0%, up from a revised decrease of 0,8% for the preceding month, but it stood at 0,4%.
Mixed U.S. data weighed on the greenback, weakening it further against its major peers. This, coupled with the positive manufacturing PMI readings for the Euro zone and its major economies caused the dollar to plunge, thus shooting gold prices up. The dollar lost positions last week against its major peers following negative economic data, which dampened speculations about earlier-than-expected quantitative easing slowdown. According to the Commerce Department, consumer spending fell 0,2% after the reading for March was revised lower to show a gain of just 0,1%. The Q1 GDP reading stood at an annualized 2.4%, below both the forecast and previous period value of 2.5%.
Michael Cuggino, who manages about $14 billion of assets at Permanent Portfolio Family of Funds Inc. in San Francisco said for Bloomberg: “Gold continues to be useful as an insurance policy in people’s portfolios to guard against uncertainty and possibly some economic dislocation. You have a lot of monetary creation going on, and while inflation is not a current threat, that doesn’t mean it’s not a threat at some point.”
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