The U.S. manufacturing PMI for October (S&P Global) came in at 54.9, below expectations (56.0) and the preliminary reading of 56.0, which was a 53-month high, but it remained above 50, indicating expansion. Gold rose 2.29% to $3,964.14 at 5:52 p.m. Saudi time, about $22 (0.56%) above its level at 5:04 p.m. The period included the release of the index at 5:45, but the rise began before the data came out, so the move cannot be attributed to it alone. Traders are awaiting the ISM Manufacturing Index at 6:00 p.m. and its impact on the Fed’s potential rate hike in December.

Today’s data

  • U.S. Manufacturing PMI (S&P Global, October): 54.9 versus 56.0 expected and 56.0 previously (flash reading), about 1.1 points lower.

  • Eurozone Manufacturing PMI (October): 52.7 versus 52.4 expected and 52.9 previously, slightly above expectations.

  • U.S. ISM Manufacturing (October): Not yet released; expected at around 54.5–54.7 versus 54.5 previously (6:00 p.m. Saudi time).

What does the PMI report say?

  • Activity: Manufacturing growth slowed from the flash reading but remains strong, with continued strength in demand for goods and AI-related equipment.

  • Prices and supply: Reports indicate that supply-chain disruptions and delivery delays are the most widespread since 2022, and that manufacturers’ selling prices are rising at their fastest pace since September 2022, which could fuel consumer inflation.

  • A mixed picture: Weaker-than-expected activity on one hand and greater price pressures on the other, making the impact on the Fed less clear-cut.

How is gold affected?

  • Price action: Gold rose from around $3,942 at 5:04 p.m. to $3,964.14 at 5:52, placing it within the breached 3,944–3,976 zone and about 0.3% below 3,976.

  • Our take: Weaker activity could support gold by reducing the odds of a Fed hike and easing the “risk-on demand” driven by a booming economy (a concern for gold after the strong flash PMI on October 23). However, the rally began before the data, as oil fell and Asian stocks rose.

  • Levels: Above 3,976, the breakdown could turn into a bear trap, according to WarrenAI; below 3,944, the trend remains bearish, with support at 3,820–3,872.

  • Next test: ISM in a few minutes, then JOLTS tomorrow and payrolls Friday.

How are the Fed and the prospect of a December hike affected?

  • Pricing before the data: The probability of a December hike fell from about 86% after the October 28 hold to around 68% at Friday’s close and roughly 71% on Monday morning, according to federal funds futures prices (secondary source). Investing.com’s tool showed 83.8% last Thursday morning, so figures vary by source.

  • PMI impact: Weaker activity tends to reduce the odds of a hike, while producer prices rising at their fastest pace since 2022 fuel inflation concerns, leaving the balance unclear ahead of ISM.

  • The key catalysts: ISM today, JOLTS Tuesday, ISM services and ADP Wednesday, payrolls Friday, and Fed remarks (Goolsbee at 7:15 p.m. Saudi time; he is a non-voter).

  • Decision date: December 8–9 (announcement at 10:00 p.m. Saudi time on the 9th).

What are we watching now?

  • ISM: Does it come in above or below 54.5, and what do the prices and employment components show?

  • Gold: Holding above 3,976 versus failing within 3,944–3,976.

  • Rate tracker: Update the probability of a December hike after ISM.

  • This week: midterm elections Tuesday, the Reserve Bank of Australia, the Bank of England Thursday, and payrolls Friday.


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