U.S. manufacturing activity jumped in May, climbing at the fastest pace in four years, boosted by a jump in new orders and production. The Institute of Supply Management’s (ISM) manufacturing gauge climbed to 54, marking the fifth straight month of expansion.
Readings above 50 reveal growth in the sector.
Precious metals update
The gold market continues to trade quietly within a range between roughly $4,300 and $4,800 an ounce, that has confined price action for the past two and half months. The long-term uptrend points higher for gold. The precious metal is in a holding pattern as negotiations to end the U.S. war in Iran continue to play out.
If there is resolution around energy tanker traffic through the Strait of Hormuz, it would ease concerns about higher consumer prices. That would make it more likely the Federal Reserve will lower interest rates in the months ahead, which is a positive development for gold. Lower interest rates boost precious metals because they don’t pay interest.
U.S. economic outlook stays fairly strong
There are crosswinds for the U.S. economy including the U.S. War in Iran, yet the fiscal stimulus package passed last year and the Fed’s 2025 interest rate cuts are helping to boost economic growth, along with the AI technology boom.
The U.S. manufacturing sector is benefiting from these dynamics as defense, aerospace and semi-conductor factory activity expands.
However, the strong manufacturing output growth isn’t boosting manufacturing jobs. Instead, U.S. manufacturing jobs have been declining since early 2023, according to both the ISM survey and the Bureau of Labor Statistics’ employment numbers. On one hand, shortages of skilled blue-collar workers in America encourages factory owners to automate. And, on the other hand, the rise of factory automation discourages workers from pursuing manufacturing careers.
All eyes on Middle East
Looking ahead, if the Strait of Hormuz is fully reopened to oil tanker traffic in June, ending the disruption to global energy supplies, economists expect the U.S. economy to churn out another year of respectable economic growth. That in turn will give the Fed room to cut interest rates as expected, which is gold positive.
Emotional decisions during market volatility can be costly
A disciplined approach to portfolio management can help you protect a portion of your wealth when it is allocated to gold. The stock market is climbing now. If a correction or a crash comes, investors with a 10% allocation to precious metals benefit from a proven strategy to help protect and grow wealth even during stock market downturns.
What is your allocation?
How much do you have invested in precious metals? The best time to implement a disciplined diversification strategy is during times like we are seeing today. Gold is in a steady, consistent range, allowing you to trade fewer of your dollars for more gold. Call us at 1-800-880-4653 to speak with a portfolio advisor and get personalized recommendations to meet your risk tolerance and long-term financial goals. Blanchard stands ready to assist.
About The Author
