Today the U.S. Manufacturing ISM report was published; according to the recent report, the U.S. Manufacturing PMI growth rate decreased to 53.5% during May 2012. The U.S. Manufacturing PMI is an index that estimates the economic progress of the U.S. manufacturing sector; the index rose for the 36th consecutive month; the growth rate fell from 54.8% in April to 53.5% in May i.e. a 1.3 percent point decrease. This means that the U.S. manufacturing sector is growing at a slightly slower pace in May compared to April.
Among the factors that were examined in this survey: one of the sharpest contractions was in inventories: from 48.5% to 46% – a decrease of 2.5 percent point; backlog of orders also fell by 2.5 percent points; on the other hand, among the sectors that grew were new orders at 60.1% – an increase of 1.9 percent points.
According to Roache et. al (2008) it was concluded that the PMI Manufacturing ISM report has a negative correlation between the daily changes of gold and silver prices and PMI Manufacturing index, without controlling to the U.S dollar effect. Currently, this news may have contributed to the rally in gold and silver prices during the day. It’s hard to make a distinction because the U.S labor report came out and didn’t meet expectations. Furthermore, the PMI news suppose to have a positive lagged correlation with natural gas prices, i.e. all things being equal including the U.S dollar, as the PMI Manufacturing ISM index tends to rise, natural gas prices also increase.
This news may have been among the factors to pull down energy commodities prices including natural gas prices and crude oil (WTI), U.S stock markets and the trade up precious metals.
Current gold price, (July 2012 delivery) is traded at $ 1,611 per t oz. a $47.2 increase or 3.02%, as of 16:21*.
Current Nymex crude oil price, (July 2012 delivery) is traded down by 3.99%, at $83.08 per barrel as of 16:21*.
Euros to USD is currently traded at 1.238 a 0.11% increase as of 16:21*.
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