(Kitco News) - The gold market is holding firm in positive territory even as the U.S. service sector continues to expand, according to the latest data from the Institute for Supply Management (ISM).
The ISM announced on Tuesday that its Services Purchasing Managers Index rose to 56% in October, compared to September’s reading of 54.9%. The data significantly beat expectations, as consensus forecasts predicted a slight decline to 53.8%.
The report indicated that activity in the service sector rose to its highest level since July 2022.
“The increase in the Services PMI® in October was driven by boosts of more than 4 percentage points for both the Employment and Supplier Deliveries indexes. The Business Activity and New Orders indexes both dropped by at least 2 percentage points. Each of the four subindexes is now above its average for 2024,” said Steve Miller, Chair of the ISM’s Services Business Survey Committee, in the report.
The gold market is not seeing much reaction to the better-than-expected economic data. Spot gold last traded at $2,741 an ounce, up 0.18% on the day.
The components of the report were slightly mixed. The Business Activity Index dropped to 57.2, down from September’s reading of 59.9.
At the same time, the New Orders Index fell to 57.4%, down from the previous reading of 59.4%.
However, the report noted solid improvement in the service sector’s labor market. The Employment Index rose to 53%, up from 48.1 reported in September.
Although the U.S. economy remains resilient, Bradley Saunders, North America Economist at Capital Economics, said he doesn’t expect it will impact the Federal Reserve’s new easing cycle.
“The further rise in the ISM services index to a two-year high in October suggests the services sector is continuing to soar, contrasting with the recent weakness in manufacturing. The strong rebound in the employment index is reassuring given the weakness in October’s non-farm payrolls data, but will probably have little influence on the Fed’s decision to cut rates by 25 basis points later this week,” he said in a note.
