Gold Prices Remain Under Pressure Following Strong Rise In ISM NonManufacturing
(Kitco News) - Gold prices continue to suffer as sentiment in the U.S. service sector improved in May, according to the latest data from the Institute for Supply Management (ISM).
Tuesday, the ISM said its nonmanufacturing index increased to a reading of 58.6%, up from April’s reading of 55.7%. The data beat economist expectations as consensus forecasts were calling for reading of 57.9%.
"The majority of respondents are optimistic about business conditions and the overall economy," the report said.
Gold prices have been under pressure through most of the morning as prices remained below critical psychological support at $1,300 an ounce. August gold futures last traded at $1,295.50 an ounce, down 0.12% on the day.
The components of the report showed broad-based gains last month. According to the report the Business Activity Index increased to a reading of 61.3%, up from April’s reading of 59.1%; at the same time the New Orders Index increased to 60.5%, up from the previous level of 60%.
The labor market saw modest growth, with the Employment Index increasing to 54.1%, up from April’s reading of 53.6%.
While gold is struggling to find momentum, the report did show one bright spot for the yellow metal as inflation pressure continue to rise. The Price Index increased to 64.3%, up from April’s reading of 61.8%.
While there was strong optimism in the service sector, the report did note that some respondents said there is growing concern surrounding potential trade wars and the impact it will have on costs of goods sold.
Katherine Judge, senior economist at CIBC World Markets, said that the service-sector data bodes well for economic growth for the second quarter.
“With the headline index back to where it was in March, the economy remains on solid footing and this is a further sign of strong Q2 growth,” she said.