Gold prices set new session highs after activity in the U.S. service sector saw a decline in December, according to the latest data from the Institute for Supply Management (ISM).
On Friday, the ISM said its Services Purchasing Managers Index fell to a reading of 50.6 last month, down from November’s reading of 52.7. The data was below consensus estimates for a reading of 52.6.
“Economic activity in the services sector expanded in December for the 12th consecutive month,” said ISM Services Business Survey Committee chair Anthony Nieves in the report. “The sector has grown in 42 of the last 43 months, with the lone contraction in December 2022.”
The Employment Index registered 43.3 in December, down significantly from the 50.7 reading the prior month. The Business Activity Index was 56.6 in December, up from the 55.1 reading in November, while the New Orders Index was 52.8 in December, down from the 55.5 reading the prior month.
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.
“The Supplier Deliveries Index registered 49.5 percent, 0.1 percentage point below the 49.6 percent recorded in November,” Nieves said. “The index remained in contraction territory for the third consecutive month, indicating that supplier delivery performance was ‘faster’ in contrast to the ‘slowing’ status in September.”
The Prices Index registered 57.4 in December, a decrease of 0.9 from November’s 58.3 reading, while the Inventories Index registered a reading of 49.6 percent last month, a decrease of 5.8 points from November’s figure of 55.4 percent.
“Nine industries reported growth in December,” Nieves said, which was down from 15 in November. “The Services PMI, by being above 50 percent for the 12th month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector, though at a slower rate in December.”
Nieves said that the survey showed continuing concerns related to economic uncertainty, geopolitical events and labor constraints.
Spot gold rose from $2,047.05 just before the 10 am EST release to a session high of $2,063.43 immediately afterward. It last traded at $2,058.87 an ounce, up 0.78% on the day.
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