On Monday, gold (NYSEARCA:GLD) futures for August delivery, the most active contract, jumped $18.90 to close at $1,411.90 per ounce, while silver (NYSEARCA:SLV) futures for July surged 48 cents to finish at $22.72.
Both precious metals climbed higher as factories in the United States logged their worst month since June 2009. The Institute for Supply Management’s index of factory activity dropped to 49.0 for May, compared to 50.7 in April.
A reading below 50.0 indicates contraction. The median forecast of 81 economists surveyed by Bloomberg was 51.0.
The ISM report adds to a growing body of manufacturing data that suggests U.S. — and global — manufacturing conditions remain dubious. At best, economists are forecasting that manufacturing output adds modestly to second-quarter gross domestic product. At worst, the contraction could fuel headwinds, particularly in the labor market.
By the end of the day, the SPDR Gold Trust (NYSEARCA:GLD) gained 1.9 percent, while the iShares Silver Trust (NYSEARCA:SLV) jumped 2.5 percent. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) increased 1.3 percent and 1.8 percent, respectively. Shares of First Majestic Silver (NYSE:AG) surged more than 5 percent.
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Disclosure: Long EXK, AG, HL, PHYS