Gold Prices Remain Down Following Mix Preliminary U.S. PMI Data
(Kitco News)- Thegold market is off its daily lows but remains under pressurefollowing preliminary mixed manufacturingand service sector sentiment data.
Friday,research firm IHS Markit said in its latest flash U.S. manufacturing PurchasingManagers Index for September dropped to a reading of 52.9 compared to August'sreading of 54.7. Consensus forecasts showed economists were forecasting areading around 55.1.
The report noted that sentiment in the manufacturing sector is at an 18-month low.
Atthe same time, the firm's service sector PMI reading was stronger thanexpected, showing a reading of 55.6, up compared to August's reading of 54.8.Economists were projecting the index to remain relatively unchanged at 54.9.
Sentiment in the service sector is at its highest level in 4 months.
The firm's composite output index dropped to a reading of 53.4, down from August's level of 54.7. its lowest level in 17 months.
Anymonthly reading above 50 points to an expanding sector, while anything belowthat shows contraction in activity.
Thegold market has been ignoring recent economic data, taking its cues from U.S.dollar flows. The market has seen little reaction to the latest report.December gold futures last traded at 1,199.20 an ounce, down 1% on the day.
The report noted that some of the weakness in manufacturingsector could be weather related as some companies shutdown production ahead HurricaneFlorence, which hit the U.S. last week.
“With storms hitting the east coast, it was no surprise tosee some disappointing survey data in September, with the flash PMI indicatingthat the pace of economic growth slipped to its lowest for almostone-and-a-half years,” said Chris Williamson, chief business economist at IHSMarkit. “However, business activity remained encouragingly resilient during themonth, commensurate with third-quarter GDP growing at an annualised rateapproaching 3%.”
In further headwinds for the U.S. economy, many business were concerned about the U.S.government’s escalated trade war with China.
“The escalation of trade wars, and the accompanying rise inprices, contributed to a darkening of the outlook, with business expectationsfor the year ahead dropping sharply during the month,” said Williamson. “Whilebusiness activity may rebound after the storms, the drop in optimism suggeststhe longer-term outlook has deteriorated, at least in the sense that growth mayhave peaked.”
By Neils ChristensenFor Kitco News
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