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Gold near session lows as ISM Services PMI beats expectations in August

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(Kitco News) - Gold prices are near session lows after activity in the U.S. service sector showed unexpected improvement, according to the latest data from the Institute for Supply Management (ISM).

On Wednesday, the ISM said its Services Purchasing Managers Index rose to a reading of 54.5% last month, up from July's reading of 52.7%. The data beat consensus estimates as economists were expecting a small drop to 52.5%.

“Thirteen industries reported growth in August," said Anthony Nieves, chair of the ISM Services Business Survey Committee, in the report. “The Services PMI, by being above 50 percent for the eighth month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector. The composite index has indicated expansion for all but three of the previous 162 months.”

Readings above 50% in such diffusion indexes signify economic growth and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.

“There has been an increase in the rate of growth for the services sector, reflected by increases in all four subindexes that directly factor into the composite Services PMI and faster supplier deliveries,” Nieves said. “Sentiment among Business Survey Committee respondents varies by industry; however, the majority of panelists are positive about business and economic conditions.”

Gold fell after the better-than-expected economic data, after seeing a very sharp run-up from $1,921.34 to $1,929.20 in the minutes before the release. Spot gold last traded at $1,921.64 an ounce, down 0.23% on the day.

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