Kitco News - Gold prices are maintaining their position above the $2,000-an-ounce mark as preliminary data suggests a contraction in the manufacturing sector, while the service sector shows neutral activity.

On Friday, the S&P Global Flash U.S. manufacturing PMI data fell to 49.4, indicating a contraction from October's revised reading of 50.0. Although economists were expecting a relatively unchanged reading of 49.9, the report shows that activity within the manufacturing sector has dropped to a three-month low.

In contrast, the service sector PMI increased to 50.8 from October's reading of 50.6, signaling expansion. This reading surpassed expectations, which called for a nearly unchanged reading of 50.4. The report also mentioned that activity within the service sector has reached a four-month high.

Readings above 50 in diffusion indexes are typically seen as a sign of economic growth. The current mixed data is influencing some renewed buying momentum in the gold market, as investors seek stability amid uncertain economic conditions. As a result, December gold futures were last traded at $2,001.10 an ounce, representing a 0.42% increase for the day.

Siân Jones, principal economist at S&P Global Market Intelligence, acknowledges that U.S. economic activity remains in neutral territory. However, she highlights that conditions appear to be aligning with Federal Reserve expectations, particularly as the labor market and inflation show signs of cooling.

Jones stated in the report, "Businesses cut employment for the first time in almost three-and-a-half years in response to concerns about the outlook. Job shedding is no longer limited to the manufacturing sector, as services firms also signaled a renewed decrease in staff numbers in November in an effort to achieve cost savings."

The economist also noted that inflation pressures are easing, as "input price inflation softened again, with cost burdens rising at the slowest rate in over three years." Jones adds that the impact of oil price hikes seems to be lessening in the manufacturing sector, where the rate of cost inflation has notably slowed down. Selling price inflation has remained subdued, consistent with the Federal Reserve's target of a 2% increase.

Overall, the gold market remains supported by the mixed economic data, with investors seeking safe-haven assets amid uncertainty in the manufacturing sector and stable but neutral activity in the service sector.