(Kitco News) - After hitting all-time highs overnight, the gold market is attracting some technical selling following mixed economic data.
Thursday, S&P Global said its preliminary Purchasing Managers Index for the manufacturing sector rose to 52.5, up from February’s reading of 52.2. Activity in the manufacturing sector was better than expected as economists a drop to 51.
Activity rose to its highest level in 21 months, the report said.
At the same time, the service sector continues to lose momentum but relatively in line with expectations. The report said that the Service PMI dropped to 51.7, down from February’s reading of 52.3.
The report said that activity in the service sector dropped to a three-month low.
The headline composite index dropped to a 2-month low of 52.2; however, the report said that the data signaled “a solid monthly improvement in business activity at US companies.”
The gold market is not seeing any major reaction to the latest economic data. However, prices are testing initial support levels. Spot gold last traded at $2,199.76 an ounce, up 0.63% on the day.
“Further expansions of both manufacturing and service sector output in March helped close off the US economy’s strongest quarter since the second quarter of last year. The survey data point to another quarter of robust GDP growth accompanied by sustained hiring as companies continue to report new order growth,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence in the report.
Although economic data remains fairly resilient, Williamson noted that it is coming at a higher cost as inflation pressures remain elevated.
“A steepening rise in costs, combined with strengthened pricing power amid the recent upturn in demand, meant inflationary pressures gathered pace again in March. Costs have increased on the back of further wage growth and rising fuel prices, pushing overall selling price inflation for goods and services up to its highest for nearly a year. The steep jump in prices from the recent low seen in January hints at unwelcome upward pressure on consumer prices in the coming months,” he said.
