(Kitco News) - The gold market continues to hold support above $4,000 an ounce but has been unable to attract any sustained bullish momentum as the U.S. economy remains fairly resilient, according to preliminary data from S&P Global.
The research firm reported Friday that its flash Composite Purchasing Managers Index (PMI) rose to 53.6 in July, up from June's reading of 51.9. The report said the broad economic barometer has climbed to an eight-month high.
According to the report, activity was driven by solid growth in the services sector. The Services PMI rose to 53.6, up from June's reading of 51.2. The data came in better than expected, as economists had forecast an unchanged reading.
At the same time, the manufacturing sector continued to expand, although at a slower pace. The Manufacturing PMI slipped to 53.8 from 53.9 in June. Economists had expected an increase to 54.4. However, the report noted that optimism remains strong, with business confidence in the year-ahead outlook rising to an eight-month high.
“US businesses reported a good start to the third quarter, the ‘flash’ PMI survey data broadly consistent with GDP growing at an annualized 2.0% against a 1.2% pace signalled for the second quarter. The month saw an encouraging return to hiring by companies, with employment rising for the first time in three months,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
The gold market is seeing little reaction to the mixed economic data. Spot gold last traded at $4,058.10 an ounce, up 0.23% on the day.
Although the U.S. economy remains relatively healthy, Williamson said some of the activity in the services sector is likely to prove short-lived as the sugar rush from the FIFA World Cup and the 250th Independence Day celebrations wears off.
He added that there are also growing concerns in the manufacturing sector that could weigh on growth through the second half of the year.
“It was also worrying – though not unexpected – to see manufacturing growth weaken as some of the stock building seen in prior months showed signs of fading. Instead, July saw a concerning intensification of supply chain delays and accompanying renewed upturn in price pressures, constraining growth and subduing demand,” he said.
Although inflation pressures cooled in June, the report noted that input costs in the U.S. continued to rise, reaching their highest level in more than a year in July.
“Companies attributed higher costs to elevated energy and shipping prices, tariffs and broad-based supplier price rises,” the report said.
