U.S. service sector beats expectations

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(Kitco News) – Gold prices saw more losses after being in the service sector in nearly three-year lows in August, according to the latest data from the Institute of Supply Management (ISM).

The Non-Manufacturing Purchasing Managers Index rose to a reading of 56.4% in August, up from July's 53.7%. The 2.7 percentage-point advance the markets, with consensus expectations for the index to come in at 54%.

Readings above 50 are seen as a sign of economic growth – the farther an indicator is above or below 50, the greater or smaller the rate of change.

"This is continuing growth in the non-manufacturing sector, at a faster rate," the report said. "The non-manufacturing sector's rate of growth rebounded after two consecutive months of cooling off. The subjects are concerned about tariffs and geopolitical uncertainty; however, they are mostly positive about business conditions. "

The details of the ISM Non-Manufacturing report revealed that the new orders sub-index rose to 60.3% from July's 54.1%.

Looking at other components, business activity subindex increased to 61.5% from 53.1% registered in July. The employment index, on the other hand, declined to 53.1% from July's reading of 56.2%. Economists keep a close eye on the latter number to the situation in the country.

Inflation pressures rose for the 27th consecutive month, with the price index coming in at 58.2% in August.

In the latest reaction to the latest ISM Non-Manufacturing index, gold futures at last trading at $ 1,522.60, down 2.42% on the day.

Prior to the release, they have already been triggered by positive U.S.-China trade headlines. And the U.S. service data only further to that mood, analysts said.

"Today's services ISM also was in line with the brighter picture of hard data on that side of the economy. "The big rebound to 56.4," said the economists, "CIBC Capital Markets chief economist Avery Shenfeld wrote on Thursday. "Overall the news today … could add to the mood of China-US talks ahead."