This comes despite the U.S. manufacturing sector experiencing a further decline in momentum since the beginning of the year.

On Friday, the Institute for Supply Management (ISM) released data indicating a drop in its manufacturing index to 47.8% for February, compared to January's reading of 49.1%. This figure fell short of expectations, as market consensus projected a slight improvement to 49.5%.

According to Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, the report confirms that the U.S. manufacturing sector is continuing to contract, albeit at a faster rate than in January. The decline is driven by slowing demand, easing output, and accommodative inputs.

It is important to note that readings above 50% in diffusion indexes represent economic growth, while readings below 50% signify contraction. The greater the deviation from the 50% mark, the greater the rate of change.

Although gold prices have been able to hold above a key resistance point, they are struggling to attract substantial follow-through buying. At the time of the report, April gold futures were trading at $2,060.50 per ounce, marking a modest 0.28% increase for the day.

An analysis of the ISM report reveals a broad-based weakness in the U.S. manufacturing sector. The New Orders Index dropped to 49.2, down from January's reading of 52.5, while the Production Index fell to 48.4, down from the previous reading of 50.4.

Additionally, the labor market displayed weakening momentum, with the Employment Index falling to 45.9 from January's reading of 47.1. On the positive side, the report indicated that inflation pressures seem to be stabilizing, as the Prices Index remained relatively unchanged at 52.5, compared to January's figure of 25.9.

Market analysts are suggesting that these disappointing manufacturing data may generate some safe-haven demand for gold, as it highlights the threat of the economy slipping into a recession.

Overall, gold continues to hold its ground above $2,050 per ounce, despite a lack of bullish momentum. In a challenging economic environment, investors are keeping a close eye on developments that could impact the precious metal's price movements.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author endeavors to provide accurate information, but neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only and should not be considered as a solicitation to engage in any commodity, securities, or other financial transactions. Neither Kitco Metals Inc. nor the author are responsible for any losses or damages resulting from the use of this publication.