Service sector

Gold price continues to struggle as services sector ISM PMI falls in April

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(Kitco News) – Disappointing economic data continues to provide little support for the gold market as all the focus is on the Federal Reserve’s impending monetary policy decision.

This time around, weaker than expected activity in the US service sector provides no upside traction for gold.

On Wednesday, the Institute for Supply Management (ISM) said its services sector index showed a reading of 57.1% for April, down from March’s reading of 58.3%. The data was weaker than expected, as the consensus forecast called for an increase to 58.5%.

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.

The gold market, while holding support above $1,850 an ounce, continues to hover near session lows. June gold futures last traded at $1,862.70 an ounce, down 0.42% on the day.

Although the services sector in the United States continues to expand, albeit at a slower pace than expected, the report notes that rising inflation remains an ongoing threat.

“Commercial activity remains strong; however, high inflation, capacity constraints and logistical challenges are impediments, and the Russian-Ukrainian war continues to affect material costs, including fuel and chemicals” , said Anthony Nieves, president of the ISM Services Business Survey. Committee.

The report noted that inflationary pressures hit a record high last month, with the price index hitting 84.6%, down from 83.8 in March.

Looking at the other components of the report, the business activity index rose to 59.1% from 55.5% in March. Meanwhile, the new orders index fell to 54.6%, down from March’s reading of 60.1%.

The labor market also lost some momentum in April, with the employment index falling to 49.5%, down from the previous reading of 54.0%.

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