Gold prices decline after positive surprise in the US service sector


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Editor’s note: The item has been updated to reflect the price changes.
(Kitco News) Gold Remained Resilient But Has Falled From $ 1,800 Per Ounce After US Service Momentum Accelerated More Than Expected In June, Latest Data from the Institute of Supply Management (ISM).
The non-manufacturing purchasing managers index reached 57.1% in June, up from 45.4% in May. The 11.7 percentage point increase surprised the markets, with consensus expectations predicting an index of 50.1%.
Readings above 50 are considered a sign of economic growth – the higher or lower an indicator 50 is, the greater or less the rate of change.
“This reading represents the growth of the non-manufacturing sector after a two-month contraction period preceded by 122 consecutive months of expansion. This is the largest one-month percentage point increase in NMI® since its inception in 1997, “said the report.
Details from the ISM Non-Manufacturing report revealed that the new orders sub-index rose to 61.6% from 41.9% in May.
As for the other components, the sub-index of commercial activity increased to 66% compared to 41% recorded in May. The employment index rose to 43.1% compared to 31.8% in May. Economists are closely monitoring the latter figure to assess the employment situation in the country.
Inflationary pressures have increased, the price index standing at 62.4% in June after 55.6% in May.
In immediate reaction to the latest ISM non-manufacturing index, gold prices edged down with the August Comex gold futures contracts for the last time at $ 1,789.60, down 0.02 % on the day.
Before publication, gold was flirting with the level of $ 1,800 an ounce despite the feeling of risk in the market.
However, the recovery in the non-manufacturing ISM in June should be treated with caution, said CIBC Capital Markets chief economist Andrew Grantham.
“While the ISM states that it receives responses” for most of a given month, with the majority of respondents generally waiting until the end of the month “, it is still likely that some of the responses arrived before postponement / cancellation of reopening plans. in parts of the country as the number of Covid-19 cases increased during the second half of the month. In addition, surveys such as these only measure the magnitude of the movement (i.e. the proportion of businesses that see activity increase / decrease in a given month) and do not tell us. say nothing about the magnitude of the recovery relative to the depth of the slowdown, “wrote Grantham on Monday.

Live 24 Hour Gold Chart [Kitco Inc.]

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