Gold Prices Edge Down As ISM Non-Manufacturing PMI Beats Expectations
(Kitco News) - Gold prices edged down slightly but remained near daily highs after momentum in the service sector beat expectations in August, according to the latest data from the Institute of Supply Management (ISM).
The Non-Manufacturing Purchasing Managers' Index rose to a reading of 58.5% in August, up from July’s reading of 55.7%. The increase was a surprise to the markets, which expected the index to climb to 57%.
Readings above 50 are seen as a sign of economic growth – the farther an indicator is above or below 50, the greater or smaller the rate of change.
In an initial reaction to the latest ISM Non-Manufacturing index, gold declined, with December Comex gold futures last seen trading at $1,209.60, up 0.69% on the day. Earlier on Thursday, the yellow metal received a boost from softer U.S. dollar.
One of the most positive elements in the ISM report was improving business, with the business activity index ticking up to 60.7%, compared with July’s 56.5%.
Looking at other components of the ISM Non-Manufacturing PMI, the new orders index rose to 60.4% from July’s reading of 57%. At the same time, employment index was up at to 56.7%, compared to the previous reading of 56.1%. Economists keep a close eye on the latter number as a gauge into the employment situation in the country.
Inflation pressures rose for the 30th consecutive month, with the price index coming in at 62.8% in August.
After analyzing a mixed bag of data this morning, economists said they were still expecting a solid Q3 growth.
“The good news on goods from the ISM was also the good news on services, as the non-manufacturing ISM came in firmer than expected in August. All told, a mixed bag of news today, but nothing that will alter expectations for a decent Q3 growth rate (we are at 3.0%) and a Fed hike at the next FOMC,” said CIBC World Markets chief economist Avery Shenfeld.