Gold gains after ISM Services PMI falls to 52.8 in January, prices moderate

NEW YORK (February 5) The U.S. service sector weakened last month while prices moderated, according to the latest data from the Institute for Supply Management (ISM).

The ISM announced on Wednesday morning that its Services Purchasing Managers Index fell to 52.8 in January, down from December’s revised reading of 54.0. The data was worse than expected, as economists were looking for a reading of 54.2.

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.

Gold rose following the 10 am EDT release. Spot gold last traded at $2,871.66 for a gain of 1.03% on the daily chart.

The components of the report were mixed. The New Orders Index fell to 51.3, down from 54.2 in December. At the same time, the Business Activity Index fell to 54.5, compared to December’s reading of 58.2.

Inflation pressures moderated in the sector, however, with the Prices Index coming in at 60.4 in January, lower than the 64.4 posted in December.

The service sector labor market also improved in January and remained in expansionary territory, with the Employment Index rising to 52.3, above the prior month’s revised 51.3 level.

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