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Gold prices trade near session lows strong S&P flash PMI data helping to weigh on market

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(Kitco News) - Bearish sentiment appears to be finally catching up with the gold market as stronger than expected activity in the manufacturing and service sectors and technical selling pressure keep prices near session lows.

Friday, the S&P Global Flash U.S. Composite PMI reported a healthy rise in activity within and service sector. The report said that the manufacturing PMI data came in at 51.8, up from August’s reading of 51.5. The data was better than expected; according to consensus estimates, economists were looking for a reading around 51.

The report said that activity in the manufacturing sector is at a two-month high.

Meanwhile, activity in the service sector also shows solid momentum rising to 49.2 up from August’s reading at 43.7. Economists were looking for a print around 45.5.

Activity in the service sector is at its highest level in three months, the report said.

The gold market is unable to find any bullish momentum and prices see sharp losses Friday. December gold futures last traded at $1,653 an ounce, down 1.67% on the day.

"While output declined in both manufacturing and services during September, in both cases the rate of contraction moderated compared to August, notably in services, with orders books returning to modest growth, allaying some concerns about the depth of the current downturn," said Chris Williamson, chief business economist at S&P Global Market Intelligence in the report.

Williamson added that although output improved slightly, September is rounding off the weast quarter of economic growth since the 2008 financial crisis.

The report also noted improving inflation pressures.

“There was also better news on inflation, with supplier shortages easing to the lowest since October 2020, helping take some of the pressure off raw material prices. These improved supply chains, accompanied by the marked softening of demand since earlier in the year, helped cool overall the rate of inflation of both firms’ costs and average selling prices for goods and services to the lowest since early-2021," said Williamson. “Inflation pressures nevertheless remain elevated by historical standards and, with business activity in decline, the surveys continue to paint a broad picture of an economy struggling in a stagflationary environment.”

According to some market analysts, the latest economic data shows that the U.S. economy continues to remain resilient in the face of rising interest rates, which could force the Federal Reserve to continue make super-sized rate hike to bring down inflation.

"Is this a situation where good news is bad news? The Fed wants to see demand sag and there's been a bounce in services," said Adam Button, chief currency strategist at

The central bank's aggressive monetary policy stance will continue to be a headwind for gold.

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