(Kitco News) – Nothing appears to be stopping the gold market as prices remain near fresh seven-year highs after preliminary data showed disappointing sentiment in the U.S. manufacturing and service sectors.
Friday, IHS Markit said its flash U.S. manufacturing Purchasing Managers Index for February fell to a reading 50.8, down from January’s reading of 51.9. Economists were expecting to see a reading of 51.5.
The report said that sentiment in the manufacturing sector is at its lowest level in six months.
At the same time, the firm’s service sector PMI reading fell into contraction territory to 49.4, down from January’s level of 53.3. Economists were expecting to see unchanged levels.
In contraction territory, sentiment in the service sector is at its lowest level in more than six years, the report said.
The weaker than expected data is supporting gold prices as the market trades just off sessions highs, which is also a seven-year high. April gold futures last traded at $1,648.8, up 1.75% on the day.
“With the exception of the government-shutdown of 2013, US business activity contracted for the first time since the global financial crisis in February. Weakness was primarily seen in the service sector, where the first drop in activity for four years was reported, but manufacturing production also ground almost to a halt due to a near-stalling of orders,” said Chris Williamson, chief business economist at IHS Markit in the report.
“The survey data are consistent with GDP growth slowing from just above 2% in January to a crawl of just 0.6% in February,” he added.
However, Williamson also said that there is some optimism that economic activity will pick up later in the year.