(Kitco News) - The gold market is trading at session highs above $4,330 per ounce after the latest data showed weakening economic activity and rising price pressures in both the manufacturing and service sectors in December.
S&P Global reported on Tuesday that its flash Purchasing Managers Index (PMI) Composite Output Index fell to 53 after posting a 54.2 in November. Economists expected a shallower decline to 53.2.
The decline was primarily driven by a weakening in services. The Service Sector PMI fell to 52.9, down from November’s reading of 54.1. According to consensus estimates, economists were looking for a reading of 53.
At the same time, the Manufacturing PMI fell slightly to 51.8, down from November’s reading of 52.2. The data was also below expectations as economists expected a decline to 52.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said the data suggest that the recent economic growth spurt is losing momentum.
“Although the survey data point to annualized GDP expansion of about 2.5% over the fourth quarter, growth has now slowed for two months,” he said. “With new sales growth waning especially sharply in the lead up to the holiday season, economic activity may soften further as we head into 2026.”
“The signs of weakness are also broad-based, with a near-stalling of inflows of work into the vast services economy accompanied by the first fall in factory orders for a year,” he added. “While manufacturers continue to report higher output, lower sales point to unsustainable production levels which will need to be lowered unless demand revives in the new year. Service providers reported one of the slowest months for sales growth since 2023.”
Williamson said a key concern is rising costs, with inflation at its highest level since November 2022, resulting in one of the steepest increases in selling charges in the past three years.
“Higher prices are again being widely blamed on tariffs, with an initial impact on manufacturing now increasingly spilling over to services to broaden the affordability problem,” he said.
Gold prices shot to session highs following the weak PMI data, with spot gold last trading at $4,330.06 per ounce for a gain of 0.58% on the session.
