(Kitco News) - The gold market is holding gains near session highs as U.S. economic activity remains mixed with the manufacturing sector contracting and service sector holding relatively steady.
S&P Global said its flash Purchasing Managers Index for the service sector fell slightly roughly in line with expectations, dropping to 55.4 in September; the data was relatively unchanged from August’s reading at 55.7.
The report said that activity in the service sector dropped to a two-month low.
However, the S&P’s manufacturing PMI dropped to 47, down from August’s reading of 47.9. The data came in weaker than expected; according to consensus estimates, economists were expecting to see a reading of 48.6.
The report said that activity in the manufacturing sector dropped to a 15-month low.
Gold prices are trading near session highs following the mixed economic data. December gold futures last traded at $2,658.70 an ounce, up 048% on the day.
““The sustained robust expansion of output signaled by the PMI in September is consistent with a healthy annualized rate of GDP growth of 2.2% in the third quarter. But there are some warning lights flashing, notably in terms of the dependence on the service sector for growth, as manufacturing remained in decline, and the worrying drop in business confidence,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, in the report.
‘The survey’s price gauges meanwhile serve as a warning that, despite the PMI indicating a further deterioration of the hiring trend in September, the FOMC may need to move cautiously in implementing further rate cuts. Prices charged for goods and services are both rising at the fastest rates for six months, with input costs in the services sector – a major component of which is wages and salaries – rising at the fastest rate for a year,” Williamson added.
