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(Kitco News) – The gold market struggles to attract further bullish momentum and tries to maintain support around $ 1,800 an ounce, following mixed sentiment in the US manufacturing and service sectors .
On Friday, IHS Markit said its flash index of U.S. manufacturing purchasing managers for July rose to 63.1 from 62.1 in June. Economists expected to see relatively unchanged sentiment in manufacturing.
The report notes that this is a new record of activity in the manufacturing sector.
Meanwhile, momentum in the service sector appears to be slowing. The report says the Flash PMI for the services sector fell to 59.8 from 64.6 in June. Economists expected sentiment to remain unchanged.
The report says activity in the service sector fell to its lowest level in five months.
The gold market isn’t seeing much reaction to the latest economic data. Precious metal price action continues to be dominated by technical flows. August gold futures traded for the last time at $ 1,801.50 an ounce, down 0.22% on the day.
Some economists have noted that a new wave of the COVID-19 Delta variant is starting to surge in the United States, which could impact economic activity, especially in the service sector.
However, Chris Williamson, chief economist at IHS Markit, said the downturn in the service sector is not surprising as the economy is finding a new balance after the nationwide shutdown last year.
He added that although momentum is slowing, data still indicates robustness in the second half of the year.
“Preliminary PMI data for July indicates that the pace of economic growth is slowing for a second consecutive month, although the cooling followed an unprecedented growth spurt in May. Some moderation in service sector growth in particular was still on the agenda after the first reopening of the economy, and most importantly, we are now seeing strong, well-balanced growth in manufacturing and services, ”he said in the report.
“While the second quarter may therefore represent a peak in the pace of economic growth according to the PMI, the third quarter still looks very encouraging,” he added.
Williamson also noted that increasing price pressures remain a concern for economic growth.
“Inflationary pressures and supply constraints – both in terms of labor and material shortages – nonetheless remain major sources of uncertainty for companies, as does the delta variant, which have all pushed business optimism for the coming year to the lowest ever seen this year Concern is that this drop in confidence could translate into reduced spending, investment and hiring, adding to the possibility of growth slowing more in the coming months, ”he said.
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. It is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.
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