Gold Declines After PMI Data Signals Strong US Economy

Spot gold fell 0.33% to $4,010.27 per ounce, following preliminary data showing continued strength in US economic activity, according to Kitco News.

The preliminary Composite Purchasing Managers' Index for October fell to 57.6 from 58.4 in the previous reading, while the manufacturing index rose to 56.0 from 55.9 in September, and the services index fell to 57.9 from 58.8.

Chris Williamson from S&P Global said the data shows the US economy "continues to boom" at the start of the fourth quarter, pointing to the fastest rise in selling prices in more than four years.

Analysts said healthy economic activity gives the US Federal Reserve room to raise interest rates to curb inflationary pressures, at a time when the data eases fears of the economy entering a recession. Analysts do not expect the recent data to provide support for gold, which has been struggling to maintain support at $4,000 per ounce since Thursday's sharp sell-off.

What do these terms mean?

Purchasing Managers' Index (PMI): A monthly survey of business executives measuring manufacturing and services activity, where a reading above 50 indicates activity expansion.

Preliminary Reading: An early estimate of the index released before the final data, reflecting the results of a partial survey at the beginning of the month.

Inflationary Pressures: The persistent tendency for prices to rise in the economy, which the Federal Reserve monitors when setting interest rates.