Gold prices up 1% as U.S. manufacturing PMI drops to 11-year lows, service sector sees record lows
(Kitco News) Gold prices edged up to daily highs after the release of preliminary manufacturing and service-sector sentiment data.
The flash U.S. manufacturing Purchasing Managers Index for April dropped to 36.9, marking an 11-year low, research firm IHS Markit said in its latest report. The April number missed market’s expectations of a reading of 38.0.
“Manufacturers recorded the sharpest fall in sales since the depths of the financial crisis in early-2009,” the HIS Markit’s news release stated. “Private sector firms in the U.S. signalled an unprecedented decline in business activity in April, with manufacturing and service sector companies registering marked contractions of output amid the outbreak of coronavirus disease 2019 (COVID-19).”
The service sector saw the worst of it as the PMI reading fellto 27.0 in April, marking the quickest contraction on record.
“Services companies registered the steepest rate of decline in the survey’s history,” the report said. “The cancellation and postponement of orders led firms to reduce their workforce numbers at a rate far exceeding anything seen previously over the survey history at the start of the second quarter.”
Any monthly reading above 50 points to an expanding sector, while anything below that shows contraction in activity.
“The COVID-19 outbreak dealt a blow to the U.S. economy of a ferocity not previously seen in recent history during April,” said IHS Markit chief business economist Chris Williamson. “The scale of the fall in the PMI adds to signs that the second quarter will see a historically dramatic contraction of the economy, and will add to worries about the ultimate cost of the fight against the pandemic.”
Gold prices edged up to new daily highs following the PMI data with June Comex gold futures last at $1,757.20, up 1.09% on the day.