Gold Ticks Higher Despite a Stronger U.S. Dollar, New ISM Data

Gold prices ticked higher during Thursday’s trading session despite the U.S. dollar gaining on June manufacturing data, which revealed a strong showing during the first half of 2021.

The precious metal is currently stuck in a range-bound pattern, so gold will probably be susceptible to short-term economic data over the coming months.

“Manufacturing activity finished the first half of 2021 on solid footing, according to data issued today by the Institute for Supply Management (ISM),” a Modern Materials Handling report said. “In its monthly Manufacturing Report on Business, ISM said that the report’s key metric, the PMI, at 60.6 (a reading of 50 or higher indicates growth), slipped 0.6% from May to June.”

“This represents the 13th consecutive month of PMI growth, coupled with June also representing the 13th consecutive month of growth for the overall economy,” the report added. “And the June PMI is 1.5% above the 12-month average of 59.1, with March’s 64.7 being the high and July 2020’s 53.7 being the low for that period.”

Get Exposure and Shield Against Volatility

With prices stuck in a wait-and-see pattern, ETF investors can opt for miners using the Sprott Junior Gold Miners ETF (SGDJ). Miners can give investors precious metals exposure without the price volatility of investing in gold itself.

SGDJ seeks investment results that correspond to the performance of its underlying index, the Solactive Junior Gold Miners Custom Factor Index. The index aims to track the performance of “junior” gold companies primarily located in the U.S., Canada, and Australia whose common stock, American Depositary Receipts (ADRs), or Global Depositary Receipts (GDRs) are traded on a regulated stock exchange in the form of shares tradeable for foreign investors without any restrictions.

It’s certainly a prime option given the way inflationary pressures are pushing the dollar higher and gold prices themselves lower.

“Gold faces headwinds as the dollar continued to rally,” an FX Empire report noted. “Since gold is priced in U.S. dollars, a strong dollar generated resistance for gold since it becomes more expensive in other currencies.”

“U.S. Yields moved lower, following a weaker than expected ISM manufacturing report,” the report said further. “A positive sign for the economy was the drop in unemployment claims.”

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