Gold Brushes $5,400 as Tariffs Chill U.S. Factory Momentum

America’s manufacturing engine kept chugging in February, but it’s clearly running on thinner fuel. The S&P Global U.S. Manufacturing Purchasing Managers’ Index (PMI) dipped to 51.6, the softest reading in seven months and down from January’s 52.4. While any mark above 50 signals expansion, survey respondents pointed to brutal winter storms and fresh tariff levies as twin headwinds cooling orders, hiring, and capital outlays. The softer print arrived the same week gold spiked to an intraday high of $5,398 per ounce—an echo of investors’ nagging doubts about inflation’s staying power and policy makers’ capacity to steer the ship.

Digging into the details, both factory output and overall new orders grew, but at their most subdued clip since last autumn. Export demand was the glaring weak spot: foreign orders shrank for an eighth consecutive month, dropping at the fastest rate since April 2025 as higher duties choked off sales to Canada. Shrinking backlogs left managers unwilling to add workers, leaving February payrolls virtually flat. 

Price pressures remained elevated, though the fever has broken somewhat. Input-cost inflation cooled from January, staying well below last year’s peaks, yet still ran hot by historical standards thanks to tariff-laden components and pricy raw materials. Competitive realities meant most firms couldn’t fully pass those costs along; the rise in selling prices slowed to a 14-month low. In textbook fashion, companies attacked margins by trimming inventories. Finished-goods stockpiles held steady after half a year of accumulation, and pre-production inventories fell for the first time since last summer as firms leaned on what was already in the warehouse while supplier deliveries stretched out amid weather-related transport snarls.

Despite the near-term malaise, business optimism ticked up to its highest level since June 2025, with many executives pinning their hopes on new product launches and geographic expansion later this year. That confidence, however, rests on the assumption that trade frictions and weather disruptions prove fleeting—an outcome history suggests is hardly guaranteed. Meanwhile, bullion’s latest leap hints that households and institutions alike still favor hard assets when monetary and fiscal experiments crowd the headlines.…