Gold price reverses gains as the U.S. service sector grows in February
(Kitco News) The gold market fell, reversing some of its daily early-morning gains, after the service sector beat expectations in February, growing for a second consecutive month, according to the latest data from the Institute of Supply Management (ISM).
The Services Purchasing Managers Index (PMI) was at a reading of 55.1% last month, following January’s 55.2%. The 0.1 percentage-point decrease from the previous month still surprised on the upside, with market consensus calls looking for the index to come in at 54.5%. All 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.
Looking at the specifics, the new orders index was at 62.6% after coming in at 60.4% in January. The business activity sub-index was at 56.3% compared to the 60.4% registered in the previous month. The employment index was at 54% after January’s 50% reading. Economists keep a close eye on the latter number as a gauge of the employment situation in the country, which is still pointing to a tight labor market.
Meanwhile, inflation pressures cooled slightly in February, with the price index edging down to 65.6% from the previous month’s 67.8%.
“Thirteen industries reported growth in February. The Services PMI®, by being above 50 percent for a second month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector,” the report said.
In response to the data, gold dropped and erased some of its early-morning gains. April Comex gold futures were last trading at $1,848.60, up 0.44% on the day. Earlier in the session, April futures hit a daily high of $1,855.50 an ounce.