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MTECHTIPS:-Gold collapses after U.S. ISM data beats expectations
Gold futures reversed gains in North American trade on Tuesday, falling into the red after data showed manufacturing activity in the U.S. contracted again in February, but at a slower pace than in the preceding month. The Institute for Supply Management said its index of purchasing managers inched up to 49.5 last month from a reading of 48.2 in January. Analysts had expected the manufacturing PMI to rise to 48.5 in February. Comments from the panel indicate a more positive view of demand than in January, as 12 of our 18 industries report an increase in new orders, while four industries report a decrease in new orders. A separate report showing that construction spending rose by the most in eight years in January added to the view that the U.S. recovery is on track. The better than expected data was seen as supporting the case for higher interest rates at some point later this year, sending the dollar broadly higher. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.3% at 98.57, the highest since February 3. A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
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