Gold reached a four week high late last week as U.S. stocks headed lower and domestic manufacturing data failed to impress. A moderate flight to quality emerged as the released data revealed that the American manufacturing sector grew less than expected in December. According to the Institute for Supply Management, their proprietary index measuring domestic factory production dropped to 55.5 from a much more robust 58.7 rating the previous month. The expected monthly rating was pegged at 57.6, according to a Reuters poll of economists.
Gold investors pounced on the weak economic data, sending the precious metal up $20 to $1186 per ounce. As per usual in the last several months, demand for gold was stimulated by any sign of weakness in an overheated equities market as traders and investors opted for asset allocation and a flight to safety. Silver had a good day as well, rising to $15.77 per ounce in Comex floor trading, which helped the precious metal to rebound from losses earlier in the week.
Next on the agenda for gold traders will be the Federal Reserve meeting minutes from their last meeting in December, to be released on January 7. The Fed meeting minutes will be poured over to see if any clues can be found regarding the Fed’s level of commitment to their previous comments when they indicated a desire to stay the course and maintain interest rates at a close to zero level.
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