Gold Holds Firm as Economic Warnings Flash

Gold prices are hovering near session highs as investors digest weaker-than-expected U.S. manufacturing data and growing concerns about global economic health. On Monday, the ISM Manufacturing PMI dropped to 48.5, signaling contraction in the sector and reinforcing the case for gold’s strength as a safe-haven asset (Kitco News Staff).

Gold was last seen trading at $2,343.70 an ounce, holding gains after the disappointing PMI report. Analysts suggest that continued softness in the U.S. economy, along with expectations for interest rate cuts later this year, could sustain upward momentum for gold in the near term.

Meanwhile, a broader view of the market reveals gold’s dominance amid a sharp divergence from industrial metals. As reported by Barron’s, gold has outperformed metals like copper and aluminum, which are down 10% on average over the past year—an ominous sign for global growth (Salisbury). Mike McGlone of Bloomberg Intelligence warns that the historically high ratio of gold to industrial metals is often associated with economic distress.

Despite some speculation that gold is in a bubble—particularly with retail buyers grabbing gold bars from Costco and 49% of fund managers calling it the “most crowded trade”—analysts caution against dismissing the metal’s rally. If equity markets stumble or political turmoil intensifies, gold could become even more attractive as capital flees riskier assets like stocks and cryptocurrencies.

In the face of sluggish manufacturing, persistent inflation, and geopolitical uncertainty, gold continues to send a strong signal—one that investors would be wise to heed.

Sources:

Kitco News Staff. “Gold Prices Holding near Session Highs as ISM Manufacturing PMI Drops to 48.5%.” Kitco News, 2 June 2025, https://www.kitco.com/news/article/2025-06-02/gold-prices-holding-near-session-highs-ism-manufacturing-pmi-drops-485.

Salisbury, Ian. “Gold Is Sending Markets a Big Warning Signal.” Barron’s, 30 May 2025, https://www.barrons.com/articles/gold-price-copper-stocks-ad575da9.