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Gold At Daily Highs After U.S. Markit Manufacturing PMI Drops To 50

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(Kitco News) -Gold prices edged up to new daily highs after the release of preliminary manufacturing and service-sector sentiment data.

The flash U.S. manufacturing Purchasing Managers Index for July dropped to 50, marking nearly a decade-low, research firm IHS Markit said in its latest report. The July number missed the market’s expectations of a 51.0 reading.

“The latest reading was in line with the neutral 50.0 threshold and therefore signalled stagnant manufacturing business conditions,” the HIS Markit’s news release stated.

The reasons behind such a low manufacturing number were lower production volumes, a fall in employment, and lower stocks of purchases.

“Production levels dropped only slightly, but the rate of decline was the greatest since August 2009. Moreover, the marginal decrease in staffing levels ended a six-year period of sustained job creation across the manufacturing sector,” the news release said.

Meanwhile, the firm’s service sector PMI reading came in at 52.2 in July, marking a three-month high and beating market expectations of a 51.7 reading.

Any monthly reading above 50 points to an expanding sector, while anything below that shows contraction in activity.

“The survey data indicated that the economy started the third quarter on a disappointingly soft footing. The PMIs for manufacturing and services collectively point to annualized GDP growth of just 1.6%, up only very marginally from a lacklustre 1.5% indicated by the survey in the second quarter,” said HS Markit chief business economist Chris Williamson.

Gold prices edged up to new daily highs following the PMI data with August Comex gold futures last at $1,428.10, up 0.45% on the day.

Earlier in the day, gold prices were trading strong, rising well above the $1,420 an ounce level early in the North American trading session.

“The precious metals bulls are enjoying very constructive price charts that continue to invite traders to the long side of the markets,” said Kitco’s senior technical analyst Jim Wyckoff.

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