The gold market is holding on to earlier momentum even as the U.S. manufacturing sector appears to be more resilient than expected this month, according to preliminary sentiment data.
Thursday, IHS Markit said its flash U.S. manufacturing Purchasing Managers Index for October rose to a reading 51.5, up from September’s reading of 51.1. Economists were expecting to see a reading of 50.7.
At the same time, the firm’s service sector PMI reading rose in line with expectations to 51.0, up from September’s reading of 50.90.
While gold market is off its session highs, prices are holding on to positive gains above $1,500 an ounce. December gold futures last traded at $1,501.90 an ounce, up 0.42% on the day.
Although the headline data was stronger than expected, some analysts note that gold remains attractive as problems in the manufacturing sector won’t be resolved anytime soon.
Despite the positive data, Chris Williamson, Chief Business Economist at IHS Markit warned that the data still points to weak growth moving forward.
“Despite business activity lifting from recent lows, the survey data point to annualized GDP growth of just under 1.5% at the start of the fourth quarter, and a near-stalling of new order growth to the lowest for a decade suggests that risks are tilted toward growth remaining below trend in coming months,” he said in the report .
“If manufacturing can continue to gain momentum this should hopefully feed through to stronger jobs growth and an improved service sector performance, leading to better GDP growth, but it remains too early to determine whether the economy has truly turned a corner,” he added.