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(Kitco News) – According to the latest data from the Institute for Supply Management (ISM), the gold market retains strong gains, but is barely reacting to weaker than expected momentum in the U.S. service sector. .
On Thursday, the ISM said its services sector PMI fell to 56.5% in February from 59.9% in January. The consensus forecast called for a reading of 61.2%.
Readings above 50% in such diffusion indices are considered a sign of economic growth and vice versa. The more an indicator is above or below 50%, the higher or lower the rate of change.
“Respondents continue to be impacted by supply chain disruptions, capacity constraints, inflation, logistical challenges and labor shortages. These conditions have affected the ability of panelists’ businesses to meet demand, resulting in slower business activity and economic growth,” said Anthony Nieves, chair of the ISM Services Business Survey panel.
The gold market continues to see strong demand for a safe haven as Russia’s invasion of Ukraine hits the one-week mark. The precious metal sees little reaction to economic data. April gold futures last traded at $1,931 an ounce, up 0.45% on the day.
The components of the report showed widespread dips in momentum. The report said the business activity index showed a reading of 55.1%, down from January’s reading of 59.9.
Meanwhile, the new orders index fell to 56.1%, down from the previous reading of 61.7%.
The report also noted a decline in labor market dynamics. The employee index fell to 48.5%, down from 52.3% in January.
Positive for gold, the report also notes an increase in inflationary pressure. The price index rose to 83.1% from 82.3% in January.
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