Gold Prices Holding On To Modest Gains Following In-Line Flash PMI Data
(Kitco News) - The gold market remains unchanged on the day, holding on to modest gains, hovering near last week’s 12-month low following positive preliminary manufacturing and service-sector sentiment data
The flash U.S. manufacturing Purchasing Managers Index for July expanded relatively in line with expectations, coming in at 55.4 in comparison to June’s revised reading of 55.4, research firm IHS Markit said in its latest report. Economists were expecting a reading around 55.1.
At the same time, the firm’s service sector PMI reading was at 56.2 down slightly comparison to June’s reading of 56.5. Economists were projecting the index to remain unchanged on the month.
Any monthly reading above 50 points to an expanding sector, while anything below that shows contraction in activity.
"U.S. private sector companies experienced a robust rise in overall business activity during July, supported by an improving economic backdrop and another sharp upturn in incoming new work," the report said.
Gold futures have seen little reaction to the preliminary data as the market holds on to modest gains. August gold futures last traded at $1,228.20 an ounce, up 0.22% on the day. Overall the precious metal remains sensitive to strong momentum in the U.S. dollar; gold prices are hovering just above last week’s 12-month low.
According to the report, the sentiment growth in the manufacturing sector was the strongest since May 2016. Meanwhile the service sector saw its slowest gains since April.
The report noted that solid domestic demand is boosting manufacturing growth. Domestic growth will help the sector combat negative international effects of a stronger U.S. dollar.
Despite the positive growth, the report did not that there are growing concerns related to the U.S. government’s trade policies.
“Trade frictions have clearly become a major cause of concern, especially among manufacturers. Firms have become increasingly worried about the impact of tariff and trade wars on demand, prices and supply chains,” said Chris Williamson, Chief Business Economist at IHS Markit. “July saw the steepest rise in prices charged for goods and services yet recorded by the surveys as firms passed rising costs on to customers, in turn frequently linked to tariffs.”