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(Kitco Goldcorp) – Gold prices have fallen below $1,800 per ounce as the service sector gained slightly more momentum than expected in January, according to the latest data from the Institute for Supply Management (ISM).
On Thursday, the ISM said its services index had a reading of 59.9% last month, slightly lower than the 62.0% reading in December. The momentum in the services sector was better than expected, as a decline to 59.5% was widely forecast.
"The composite index increased for the 20th consecutive month after two months of contraction in April 2020 and May 2020. Despite the pullback in most sub-indices in January, the growth rate in the services sector remained strong," said Anthony Nieves, chairman of the ISM Services Business Survey Committee.
The gold market reacted little to the latest economic data as gold prices remained below $1,800 per ounce. April gold futures were last at $1,790.40 per ounce, down more than 1 percent on the day. Gold has been stuck near $1,800 for the past few days, recovering from last week's sharp sell-off.
Looking at some of the components of the report, the business activity index fell to 59.9%, compared with a reading of 68.3% in December. Meanwhile, the new orders index fell to 61.7% from 62.1%.
The employment index fell to 52.3% in January, down from 54.7% in December.
The ISM also continued to report relatively high inflationary pressures. The price index fell to 82.3%, down from 83.9% in December. ISM said continued high inflation remains a concern for future growth.
"Respondents continue to be impacted by supply chain issues associated with the coronavirus pandemic, including capacity constraints, demand-pull inflation, logistics challenges and labor shortages. In addition, the COVID-19 omicron variant disrupted operations, particularly through reduced staffing levels," Nieves said.
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