Gold Prices See Small Bounce Following Disappointing Flash U.S. PMI Data
(Kitco News) - The gold market has recovered some of its losses following weaker than expected preliminary manufacturing and service sector sentiment data.
Thursday, IHS Markit said its flash U.S. manufacturing Purchasing Managers Index for August declined to a reading 49.9, down from July’s reading of 50.4. Economists were expecting to see a reading of 50.5.The report said that sentiment in the manufacturing sector has fallen into contraction territory and is at its lowest point in nearly a decade.
At the same time, the firm’s service sector PMI reading fell to 50.9, down from July’s reading of 53.0. Economists were forecasting the index to come in at 52.9. Sentiment in the service sector is at its lowest point in three months, the report said.
Any monthly reading above 50 points to an expanding sector, while anything below that shows contraction in activity.
Gold prices were under significant selling pressure but has managed to bounce off its lows. Although still down on the day, prices continue to hold critical support above $1,500 an ounce. December gold futures last traded at $1,5213.30 an ounce, down 0.16% on the day.
According to some economists the drop in the flash U.S. PMI data is raising the threat of a recession.
"August’s survey data provides a clear signal that economic growth has continued to soften in the third quarter. The PMIs for manufacturing and services remain much weaker than at the beginning of 2019 and collectively point to annualized GDP growth of around 1.5%," said Tim Moore, economics associate director at IHS Markit. “The most concerning aspect of the latest data is a slowdown in new business growth to its weakest in a decade, driven by a sharp loss of momentum across the service sector."