Service sector

Gold price remains under pressure, ignores jump in US ISM services sector PMI to 56.7

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Correction: A previous article cited the wrong data for July ISM Service PMI. The following article contains the correction numbers.

(Kitco News) – The gold market continues to come under strong technical selling pressure, but has largely ignored stronger-than-expected activity in the U.S. services sector, according to the latest report from the Institute for Supply Management (ISM). .

On Wednesday, the ISM said its services sector index showed a reading of 56.7% for July, up from June’s reading of 55.3%. The data beat expectations as the consensus forecast called for a drop to 53.5%.

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.

“Growth continues – at a faster pace – for the service sector, which has grown for all but two of the past 150 months. The slight increase in service sector growth is due to an increase in business activity and new orders,” said Anthony Nieves, Chairman of theism Services Business Investigation Committee.

The gold market is not seeing much movement in reaction to the latest economic data. December gold futures last traded at $1,776.80 an ounce, down 0.72% on the day.

Looking at the components of the report, the business activity index jumped to 59.9%, up from June’s reading of 56%. The new orders index rose to 59.9% from 55.6% in June.

However, the report shows a slowdown in labor market dynamics. The employment index remained in contraction territory at 49.1%, up from June’s reading of 47.4%.

Although activity in the services sector remains strong, inflationary pressures appear to be easing. The report said the price index fell to 72.3% from the previous reading of 80.1%.

Michael Pearce, senior US economist at Capital Economics, said the latest service sector data will help ease some recession fears.

“Unlike S&P Global’s weaker U.S. services survey, July’s ISM reports suggest the overall economy is holding up well. With borrowing costs down from their June peak and with lower gasoline prices likely to feed through to higher real disposable incomes, the immediate outlook for services looks a bit brighter,” he said.

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