U.S. Manufacturing Sector Shows New Signs of Life, Gold Trades at $5,000

[Ben Graham]

Activity at factories and mines in the United States cranked up in January. U.S. industrial production rose 0.7% last month, the biggest jump in nearly a year, the Federal Reserve reported. Gold traded around $5,000, and silver traded around $78 as precious metals continue to tread water in a quiet, sideways, orderly market trading.

Digging deeper into the economic news, U.S. factories produced more computers, electronic products, machinery, and cars in January.

Bigger picture, the climb in factory production reveals early signs of a potential recovery in the manufacturing sector, something the Trump Administration has tried to engineer with official U.S. trade policy over the past year.

The latest manufacturing news suggests some U.S. companies may be taking advantage of tax incentives and moving forward with capital spending plans.

Other economic reports also show there may be progress toward a pick-up in the manufacturing sector. These include:

• The January employment report showed a 5,000 increase in manufacturing jobs, according to the Bureau of Labor Statistics. That reversed a negative trend of 13 consecutive months of U.S. manufacturing job losses.
• The Institute for Supply Management’s manufacturing index rose to 52.6 in January, marking the fastest pace of growth since 2022. New orders and production drove the increase. The ISM index jumped over 50 in January, after December’s 47.9 reading. Readings over 50 indicate expansion in the manufacturing sector.
• In January, capacity utilization at factories (which measures the percentage of available industrial capacity, specifically in manufacturing, mining, and electric/gas utilities, that is actually in use) rose to 75.6%, the highest level since September.

Precious Metals Action Turns Sideways As Market Consolidates Big January Gains

Gold etched an extraordinary month in the history books in January, climbing above $5,560 for the first time. In February, gold and silver action have languished in a quiet, sideways range.

Slight dips in price have been met with fresh buying action. Gold has generally traded between $5,090 and $4,888 an ounce in recent weeks. Silver is consolidating between $74 and $85. The long-term uptrends in precious metals remain strong. It’s not uncommon for markets to trade quietly in neutral patterns after big up moves.

The Next Catalyst for Precious Metals?

Investors are watching Federal Reserve officials for clues on when the central bank might cut interest rates next. Ideas that the Fed will begin cutting rates soon could unleash a fresh buying wave in metals, which don’t offer any interest or yield. Lower interest rates historically boost precious metals for months during central bank easing cycles. The Fed is scheduled to meet next on March 17-18.

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