Gold prices jump into positive territory as ISM Services PMI falls to 50.3 in May
Monday, the ISM said its Services Purchasing Managers Index fell to 50.3% last month, down from April's reading of 51.9%. According to consensus estimates, economists were looking for an increase of 52.6%.
The gold market has seen a solid bounce off of support just above $1,950 an ounce, and the disappointing economic data is providing new momentum. August gold futures last traded at $1,976.50 an ounce, up 0.35% on the day."There has been a pullback in the rate of growth for the services sector.
The labor market also lost momentum last month, with the Employment index falling into contraction territory with a reading of 49.2%, down from April's reading of 50.8%. Analysts have said that gold is seeing new momentum as the disappointing economic data could force the Federal Reserve to end its interest rate hikes. In reaction to the ISM data, markets see a more than 85% chance that the Federal Reserve will leave rates unchanged at next week's monetary policy meeting.Andrew Hunter, deputy chief U.S. economist at Capital Economics said that the ISM data “suggests the economy is barreling towards recession.
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