Gold Prices Holding On To Gains As Sentiment In U.S. Service Sector Grows
(Kitco News) - Gold prices are holding near session highs, just under critical resistance at $1,250 an ounce as sentiment in the U.S. service sector continues to build, according to the latest data from the Institute of Supply Management (ISM).
The ISM Non-Manufacturing Purchasing Managers' Index rose to a reading of 60.7% in November, up from October’s reading of 60.3%. The increase was better than expected as economists were calling for a reading of 59%.
"The non-manufacturing sector continued to reflect strong growth in November," the report said. "Respondents remain positive about current business conditions and the direction of the economy.”
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.
Gold is holding on to recent gains, showing little reaction to the latest economic data. The market is reacting to strong fear sentiment throughout financial markets as U.S. equity markets remain down nearly 2% across the board. February gold futures last traded at $1,247.90 an ounce, up 0.43% on the day.
The components of the index showed broad-based strength within the service sector. The business activity index increased to 65.2%, up from October’s reading of 62.5%.
However the labor market, while still strong, showed further evidence of falling momentum. The employment index dropped to a reading of 58.4%, down from October’s reading of 59.7%. According to some economists, the latest employment data continues to highlight growing downside risks for Friday’s official nonfarm employment report.
The data comes after private-sector payrolls processor ADP said that employment numbers last month were weaker than expected, causing an initial modest spike in gold prices.
The report also noted a rise in inflation pressures, a positive for gold. The Price index increased to 64.3%, up from October's reading of 61.7%