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Gold Sees Little Reaction To ISM Non-Manufacturing Data

Kitco News

(Kitco News) - Gold investors 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 Supply Management (ISM).

Monday, the ISM said its Non-Manufacturing Purchasing Managers' Index showed a reading of 60.3% in October, down slightly from September’s reading of 61.6%. The reading was better than expected as economist forecasted a fall to 59.3%.

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 was unchanged, with December Comex gold futures last seen trading at $1,233.50, relatively unchanged  on the day.

Looking at the components of the report, the business activity index fell to a reading of 62.5%, down from September’s reading of 65.2%; meanwhile the New Orders Index fell a tick lower to 61.5%, compared to the previous level of 61.6%.

The labor market saw a modest drop with the Employment Index falling to 59.7%, down from September’s reading of 62.4%.

Inflation remains fairly muted with the Price Index falling to 61.7%, down from the previous level of 64.2%.

Despite strong optimism in the service sector, there are growing concerns, especially on the growing global trade war.

“There are continued concerns about capacity, logistics and tariffs,” the report said.

The mining sector, in particular, is feeling the effects of the trade wars.

“It has been very difficult to make decisions due to instability brought by the latest trading dispute. In this environment, clients tend to postpone capital-expenditure decisions,” one respondent, from the mining sector said in the survey.

According to some analysts, U.S. economic data is taking a backseat to the political uncertainty in the U.S. Currently political pundits are expecting the Democratic Party to take control of the House, while the Republican Party is expected to hold on to the Senate.

Commodity analysts have said that a split Congress is expected to create gridlock in Washington, which would be positive for gold if there is a strong rise in geopolitical uncertainty.

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