News Bites
Gold prices jump into positive territory as flash manufacturing and service-sector PMI data falls into contraction territory
(Kitco News) - Gold prices have jumped into positive territory as recession fears continue to grow with sentiment in the both the manufacturing and service sectors both fall into contraction territory in November.
Wednesday, the S&P Global Flash US Composite PMI showed the Manufacturing PMI falling into contraction territory with a reading of 47.6, down from October’s revised reading of 50.4. The report said that activity in the manufacturing sector is at its lowest point in 30 months.
Meanwhile, activity in the service sector dropped deeper into contraction territory falling to a three-month low at 46.1, down from October’s reading of 47.8.
The gold market is seeing some renewed safe-haven demand in initial reaction to the disappointing data. December gold futures last traded at $1,745 an ounce, up 0.29% on the day.
Despite the disappointing headline number, the report noted some improvements in the supply chain with firms signaling the first improve in supplier performance since October 2019. The report also noted that the slowing activity is also helping to push inflation pressures down, which has been the Federal Reserve’s goal as it has raised interest rates at the fastest pace in 40 years.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said that the broad-based weakness in November is consistent with the economy contracting at an annualized rate of 0.1%.
“Companies are reporting increasing headwinds from the rising cost of living, tightening financial conditions – notably higher borrowing costs – and weakened demand across both home and export markets. “Skill shortages also remain a worrying constraint on expansion,” he said in the report.
““In this environment, inflationary pressures should continue to cool in the months ahead, potentially markedly, but the economy meanwhile continues to head deeper into a likely recession,” he added.
