(Kitco News) - The gold market remains within striking distance of $2,700 an ounce, even as U.S. economic activity shows resilience with growing momentum in the service sector.
On Friday, S&P Global reported that its flash Purchasing Managers Index (PMI) for the service sector rose to 57 in November, up from October’s reading of 55. Activity in the service sector exceeded expectations, as economists had forecasted a reading of 55.2.
The report highlighted that activity in the service sector reached its highest level in nearly three years.
Meanwhile, the U.S. manufacturing sector continues to contract, though at a pace consistent with expectations. According to the report, the PMI for the manufacturing sector rose to 48.8, up from October’s reading of 48.5.
The report also noted that activity in the manufacturing sector has reached a four-month high.
The gold market has shown little reaction to the better-than-expected economic data, with prices continuing to be driven by solid bullish momentum. Spot gold last traded at $2,692.60 an ounce, up nearly 1% on the day.
Although the manufacturing sector remains in contraction territory, the report highlighted signs of improvement as output demand rose at its fastest pace in two-and-a-half years, driven by improving business confidence.
“The business mood has brightened in November, with confidence about the year ahead hitting a two-and-a-half-year high. The prospect of lower interest rates and a more pro-business approach from the incoming administration has fueled greater optimism, in turn helping drive output and order book inflows higher in November,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
"The rise in the headline flash PMI indicates that economic growth is accelerating in the fourth quarter, while inflationary pressures are cooling. The survey's price gauge covering goods and services signaled only a marginal increase in prices in November, pointing to consumer inflation running well below the Fed's 2% target,” Williamson added.
