Gold price attempts to tackle $1,850 resistance as U.S. service sector disappoints in November
(Kitco News) Gold edged up as momentum in the service sector disappointed in November, according to the latest data from the Institute of Supply Management (ISM).
The Services Purchasing Managers Index was at a reading of 55.9% in November, down from October’s 56.6% and at the lowest reading since May. The 0.7 percentage-point decrease was more than the markets were expecting, with consensus expectations calling for the index to come in at 56.0%.
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.
"This reading represents a sixth straight month of growth for the services sector, which has expanded for all but two of the last 130 months," the report said.
The details of the ISM Services report revealed that the new orders sub-index was at 57.2% following October’s 58.8%.
Looking at other components, the business activity sub-index was at 58% following 61.2% registered in October. The employment index was at 51.5% versus October’s 50.1%. Economists keep a close eye on the latter number as a gauge into the employment situation in the country.
Inflation pressures rose, with the price index coming in at 66.1% in November after October’s reading of 63.9%.
Gold prices advanced in reaction to the data with February Comex gold futures last trading at $1,838.40, up 0.45% on the day.
November’s ISM service data reveals a slowdown in recovery amid a record rise in coronavirus cases, said CIBC Capital Markets economist Katherine Judge.
“The recovery in activity on the services side of the US economy continued to slow in November as Covid cases surged, suggesting that the need for further fiscal support for the economy is becoming more urgent,” Judge wrote on Thursday. “With activity likely to continue to be limited given the spread of the virus, it's possible that the ISM's index could fall further in the months ahead, before mass vaccination is well underway.”