(Kitco News) -The gold market is holding support above $2,350 an ounce but is seeing some renewed selling pressure as both the U.S. manufacturing and service sectors see healthy activity in June.
Friday, S&P Global said its preliminary Purchasing Managers Index for the manufacturing sector rose to 51.7, from May’s reading of 51.3. Activity in the manufacturing sector was better than expected, as economists forecasted a relatively neutral reading at 51.0.
The report said that activity in the manufacturing sector has risen to a three-month high.
However, the report noted an even more significant recovery within the service sector. The services PMI increased to 55.1, up from May’s reading of 54.8. According to consensus forecasts, economists projected a modest drop to 53.4.
The report said that activity in the service sector has risen to a 26-month high.
“US business activity growth accelerated to its fastest for 26 months in June, according to provisional PMI survey data from S&P Global, signaling a strong end to the second quarter. The service sector led the upturn with additional support from manufacturing, albeit with the latter’s recent revival losing some momentum,” the report said.
The gold market has dropped its session lows but still holds support above a critical physiological level. August gold futures last traded at $2,350.10 an ounce, down 0.79% on the day.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said the data suggests that the U.S. economy is expanding by 2.5%.
“The upturn is broad-based, as rising demand continues to filter through the economy. Although led by the service sector, reflecting strong domestic spending, the expansion is being supported by an ongoing recovery in manufacturing, which so far this year is enjoying its best growth spell for two years,” he said.
In further good news for consumers, Williamson noted that the improved activity is not causing inflation to heat up.
“Selling price inflation has meanwhile cooled again after ticking higher in May, down to one of the lowest levels seen over the past four years. Historical comparisons indicate that the latest decline brings the survey’s price gauge into line with the Fed’s 2% inflation target,” he said.
