Gold price edges down as U.S. durable goods miss expectations

New York (Jan 27)  Gold ticked down after newly released data showed that orders for long-lasting U.S. factory goods were up 0.2% in December versus the expected advance of 0.9%.

Meanwhile, November’s data was upwardly revised to an increase of 1.2%.

Following the release, gold prices edged down with April Comex gold futures last trading at $1,843.70, down 0.60% on the day.

The monthly increase in durable-goods orders equaled to $0.4 billion and was largely led by machinery-related items.

The core durable goods section, which excludes volatile transportation sector, was up 0.7% in December, beating expectations. Excluding defense, new orders advanced 0.5%.

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.

Looking at the December report, analysts said that the details were more encouraging than the headline number.

“The weakness was concentrated in the volatile transportation component that showed orders drop off by 1.0%,” said CIBC Capital Markets senior economist Katherine Judge. “The more important core capital goods group (non-defense, ex-aircraft), an indicator of business investment in equipment, registered 17.5% growth in shipments in annualized terms over the fourth quarter, suggesting that business investment will be a growth contributor in tomorrow's Q4 GDP report. The advance in orders in that group, which rose by 20% annualized over the fourth quarter, is a positive indicator for capital spending in early 2021 as goods-producing sectors are expected to continue to remain resilient amidst the second wave.”

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