Gold Sees Little Reaction To ISM Non-Manufacturing Data
(Kitco News)- Goldinvestors are keeping a low profile ahead of Tuesday's U.S. mid-term election,as the market sees little reaction to strong positive sentiment in the U.S.service sector according to the latest data from the Institute of SupplyManagement (ISM).
Monday,the ISM said its Non-Manufacturing Purchasing Managers' Index showed a readingof 60.3% in October, down slightly from September's reading of 61.6%. Thereading was better than expected as economist forecasted a fall to 59.3%.
Readingsabove 50 are seen as a sign of economic growth - the farther an indicator isabove or below 50, the greater or smaller the rate of change.
Inan initial reaction to the latest ISM Non-Manufacturing index, gold was unchanged,with December Comex gold futures last seentrading at $1,233.50, relatively unchanged on the day.
Lookingat the components of the report, the business activity index fell to a readingof 62.5%, down from September’s reading of 65.2%; meanwhile the New OrdersIndex fell a tick lower to 61.5%, compared to the previous level of 61.6%.
Thelabor market saw a modest drop with the Employment Index falling to 59.7%, downfrom September’s reading of 62.4%.
Inflationremains fairly muted with the Price Index falling to 61.7%, down from theprevious level of 64.2%.
Despitestrong optimism in the service sector, there are growing concerns, especiallyon the growing global trade war.
“Thereare continued concerns about capacity, logistics and tariffs,” the report said.
Themining sector, in particular, is feeling the effects of the trade wars.
“It has been very difficult to make decisions due toinstability brought by the latest trading dispute. In this environment, clientstend to postpone capital-expenditure decisions,” one respondent, from themining sector said in the survey.
Accordingto some analysts, U.S. economic data is taking a backseat to the politicaluncertainty in the U.S. Currently political pundits are expecting the DemocraticParty to take control of the House, while the Republican Party is expected tohold on to the Senate.
Commodityanalysts have said that a split Congress is expected to create gridlock inWashington, which would be positive for gold if there is a strong rise ingeopolitical uncertainty.
By Neils ChristensenFor Kitco News
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