Gold prices holding steady following mixed U.S. flash PMI data
New York (May 24th) Renewed momentum in the gold market is helping to push prices solidly above $1,850 an ounce and the precious metal also appears to be finding some support following mixed preliminary PMI Data.
Tuesday, the S&P Global Flash US Composite PMI reported in line activity for the manufacturing sector and slowing momentum within the service sector. The report said that the manufacturing PMI data came in at 57.5, down from April’s reading of 59.2. According to consensus estimates, economists were looking for a reading around 57.6.
The report said that activity within the manufacturing sector is at a three-month low.
Meanwhile, the service sector was slightly weaker than expected falling to 53.5, down from April’s reading of 55.6. Economists were looking for a print around 55.1.
Activity within the service sector is at its lowest level in four months, the report said.
The gold market was holding solid gains ahead of the report and remains relatively unchanged in initial reaction. June gold futures last traded at $1,865.2 an ounce, up nearly 1% on the day.
“Latest ‘flash’ PMI data from S&P Global indicated a slower expansion in business activity across the US private sector during May. Manufacturers and service providers signaled softer upturns in output amid elevated inflationary pressures, a further deterioration in supplier delivery times and weaker demand growth,” the report said.
The report noted that inflation continues to weigh heavily on activity as input prices rose to a new record high.
“Firms reported a substantial uptick in cost burdens, largely driven by a record-breaking rise in service sector input prices. The rate of cost inflation at manufacturers also accelerated and was among the fastest in the series history,” the report said.
Although momentum is slowing, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said that the U.S. is on track to rise by 2% this year.
“The early survey data for May indicate that the recent economic growth spurt has lost further momentum. Growth has slowed since peaking in March, most notably in the service sector, as pent up demand following the reopening of the economy after the Omicron wave shows signs of waning. Companies report that demand is coming under pressure from concerns over the cost of living, higher interest rates and a broader economic slowdown,” he said.
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