Gold price falls to new session low following record high in ISM service-sector data
(Kitco News) -Gold prices remains deep in negative territory falling to anew session low following stronger than expected activity in the U.S. servicesector.
Wednesday,the Institute for Supply Management (ISM) said its non-manufacturingindex showed a reading of 66.7% for October, up from September’s reading of 61.9%.The data were much more robust than expected, as consensus forecasts werecalling for an unchanged reading.
“In October, theServices PMI registered another all-time high of 66.7%, 4.8percentage points above September’s reading of 61.9%. This figure exceeds theformer all-time high of 64.1 percent in July,” the report said.
Readingsabove 50% in such diffusion indexes are seen as a sign of economic growth andvice-versa. The farther an indicator is above or below 50%, the greater orsmaller the rate of change.
Thegold market has lost further ground in reaction to the latest solid economicdata. Spot gold prices last traded at $1,763.70 an ounce, down 1.34% on the day.
Along with the record headline number, the report showedbroad-based gains. The Business Activity Index increased to 69.8%, up fromSeptember’s reading of 62.3%. At the same time the New Orders Index increasedto 69.7%, up from the previous level of 63.5%.
Despite the strong activity, the labor market lost momentumlast month. The report said that the Employment Index dropped to 51.6, downfrom September’s reading of 53.
“Demandshows no signs of slowing,” said Anthony Nieves, chair of the Institute for ISMServices Business Survey Committee. “However, ongoing challenges - includingsupply chain disruptions and shortages of labor and materials - areconstraining capacity and impacting overall business conditions.”
Whileactivity is picking up, so is inflation. The report said that the Prices Index increasedto 82.9%, up from September’s reading of 77.5%.
By Neils ChristensenFor Kitco News
Follow neils_C
nchristensen@kitco.comwww.kitco.com