Gold Nears 6-Month Lows After U.S. Durable-Goods Orders Report
(Kitco News) - Gold prices dropped after newly released data showed that orders for long-lasting U.S. factory goods fell for the second month in a row in May.
Orders for durable goods were down 0.6% last month after falling upwardly revised 1% in April, the Commerce Department said on Wednesday. Market consensus called for durables to decline 0.9%.
Gold was down immediately after the release, with August Comex gold futures nearing a fresh six-month low, last seen at $1,256.70, down 0.25% on the day.
The monthly decline in durable-goods orders equaled to $1.4 billion and was largely led by the 1% drop in transportation equipment, which was down for the second consecutive month. Excluding transportation, new orders were down 0.3%. Excluding defense, new orders dropped 1.5%.
The government’s durables report covers items with an expected life of at least three years, such as kitchen appliances, computers, furniture, autos and airplanes.
Even though spending on durable goods represents a small part of American economic output, economists carefully watch for any changes as a sign of where the economy might be heading.
CIBC Capital Markets economist Katherine Judge pointed out that the upward revisions to April’s numbers helped to “offset some of the weakness” seen in May’s figures.
“While the 3-month average annualized pace of core orders came down a bit, it's still running at a healthy pace and we expect that to continue and possibly accelerate as business spending benefits from tax reform,” Judge said in a note published after the release.
Gold prices continue to trade under heavy pressure this week as the U.S. dollar rallies. But, Kitco’s senior technical analyst Jim Wyckoff is projecting “better days ahead.”
“The precious metals bulls are attempting to stop the bleeding in [gold] prices, which has mainly come from an eroding raw commodity sector. However, the big rally in crude oil recently is a solid clue the raw commodity sector has bottomed out and will see better days just ahead,” Wyckoff said in his AM Roundup.
By Anna GolubovaFor Kitco News
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