Spot gold shoots to session high above $5,060/oz as flash S&P PMI worst in 10 months

Kitco Media
By Ernest Hoffman
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Spot gold shoots to session high above $5,060/oz as flash S&P PMI worst in 10 months teaser image

(Kitco News) - The gold market is trading at fresh session highs after the latest U.S. data showed the services and manufacturing sectors weakening beyond expectations this month.

S&P Global reported on Friday that its flash Composite Purchasing Managers Index (PMI) fell to 52.3 in February, down from January’s reading of 53. The number was below expectations, as economists had forecasted a reading of 52.6.

“US business activity rose at the weakest rate for ten months in February, according to early ‘flash’ PMI data, signaling a cooling of economic growth,” the report noted. “Rates of expansion moderated in both manufacturing and services, reflecting weakened order book trends, in turn led by falling exports, though adverse weather was partly to blame. Employment rose only marginally as companies worried about weak sales and high costs”

“Average input costs rose sharply again in February, linked to supplier price hikes, tariffs and higher wages, feeding through to the largest increase in average selling prices since last August,” the report added.

The PMI for the service sector also fell to 52.3 in February, down from January’s reading of 52.7. Activity in the service sector was also below expectations, as economists had forecasted a reading of 53.

The U.S. manufacturing sector also weakened. According to the report, the PMI for the manufacturing sector fell to 51.2, down from January’s reading of 52.4, and also below the consensus forecast of 52.6.

The gold market rocketed to session highs following the PMI data. Spot gold last traded at $5,060.25 per ounce for a gain of 1.28% on the daily chart.

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“A combination of weakened demand, high prices, and adverse weather colluded to dampened business activity in February, resulting in the slowest expansion of output for ten months,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence. “Customer demand growth has softened, with orders even falling in factories, curbing jobs growth to a crawl across both manufacturing and services.”

“The PMI data so far this year are indicative of GDP rising at an annualized rate of just 1.5%, signaling a marked cooling of the economy in the first quarter compared to the robust growth rates seen in the second half of last year,” he added. “Companies are suggesting that at least some of this slowdown may prove temporary, partly as extreme weather passes, with business growth expectations rising sharply to the highest for just over a year in February. However, confidence remains subdued on the whole, as companies worry about the political environment and impact of policies such as tariffs, the latter once again blamed for widespread price rises, in turn hitting affordability and limiting sales growth for many businesses.”

Kitco Media

Ernest Hoffman

Ernest Hoffman is a Crypto and Market Reporter for Kitco News. He has over 15 years of experience as a writer, editor, broadcaster and producer for media, educational and cultural organizations. Ernest began working in market news in 2007, establishing the broadcast division of CEP News in Montreal, Canada, where he developed the fastest web-based audio news service in the world and produced economic news videos in partnership with MSN and the TMX. He has a Bachelor's degree Specialization in Journalism from Concordia University. You can reach Ernest at 1-514-670-1339.

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