TEHRAN (Iran News) – A multi-year rise in sentiment in the manufacturing and service sector is pressuring gold lower as prices break below critical support. December gold futures last traded near session lows at $1,841.40 an ounce, down 1.6% on the day.

Gold prices remain under pressure struggling to attract new bullish momentum as sentiment in the manufacturing and service sector rise to multi-year highs.

Monday, IHS Markit said its flash U.S. manufacturing Purchasing Managers Index for November rose to a reading 56.7, up from October’s reading of 53.4. The data was significantly better than expected. Economists were expecting to see a reading of 52.5.

The report said that sentiment within the manufacturing sector is at its highest level in 74 months.

At the same time, the firm’s service sector PMI reading rose to a reading of 57.7, up from October’s reading of 56.9. Economists were forecasting the index to come in at 55.8.

Sentiment within the non-manufacturing sector is at its highest level in 68 months, the report said.

Any monthly reading above 50 points to an expanding sector, while anything below that shows contraction in activity.

Gold prices were under pressure ahead of the PMI data and has seen signigificant sellling pressure in reaction. The market has broken below initial resistance at $1,850 an ounce and is trading just off session lows. December gold futures last traded at $1,834.50 an ounce, down 2% on the day.

At first blush the latest economic data are negative for gold but it does highlight analysts’ growing concerns that inflation could pick up at faster pace than expected. Many analysts remain bullish on gold as an important inflation hedge.

Chris Williamson, chief business economist at IHS Markit, said that the rise in sentiment is coming at a price.

“First the good news: business activity across both manufacturing and services rose in November at the strongest rate since March 2015. The upturn reflected a further strengthening of demand, which in turn encouraged firms to take on staff at a rate not previously seen since the survey began in 2009,” he said in the report.

“However, the surge in demand and hiring has pushed prices and wages higher. Average selling prices for goods and services rose at the fastest rate yet recorded by the survey, with shortages of supplies also more widespread than at any time previously reported,” he added.