Gold price remains under pressure as ISM Service PMI falls to 55.3
(Kitco News) - The gold market continues to slip lower as the U.S. service sector losses less momentum than expected, according to the latest report from the Institute for Supply Management (ISM).
Wednesday, the ISM said that its service-sector index showed a reading of 55.3% for June, down from May’s reading of 55.9%. However, the data beat expectations, as consensus forecasts called for an increase to 53.9%.
Although activity was slightly better than expected the report noted that this is the lowest reading since May 2020
Readings above 50% in such diffusion indexes are seen as a sign of economic growth and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.
The gold market is seeing some strong technical selling following Tuesday’s sharp drop and has fallen slightly lower in initial reaction to the latest economic report. August gold futures last traded at $1,755 an ounce, down 0.50% on the day.
“According to the Services PMI®, all 18 industries reported growth. The composite index indicated growth for the 25th consecutive month after a two-month contraction in April and May 2020. Growth continues — albeit slower — for the services sector, which has expanded for all but two of the last 149 months. The slight slowdown in services sector growth was due to a decline in new orders and employment,” said Anthony Nieves, Chair ISM Services Business Survey Committee.
Looking at the components of the report, the Business Activity Index rose to 56.1%, up from 54.5% in May. Meanwhile, the New Orders Index fell to 55.6%, down from May’s reading of 57.6%.
The report noted a drop in the labor market. The Employment Index fell to 47.4%, down from May’s reading of 50.2%.
The gold market is not finding any bullish momentum on the inflation front. Although price pressures remain elevated, the report noted that the Price Index has fallen to 80.1%, down from the previous reading of 82.1. This is the second month input costs have fallen.