Gold dips to $4,141oz after ISM Services PMI falls to 54.9 in September

The ISM announced on Monday morning that its Services Purchasing Managers Index came in at 54.9 in September, down from 55.4 in August. The data was slightly worse than expected, as economists were looking for a reading of 55.

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.

Spot gold was declining from its earlier highs since the North American open, and last traded at $4,141.73 per ounce for a slight gain of 0.03% on the daily chart.

“The Business Activity Index remained in expansion territory in September, decreasing 5.2 percentage points to 56.5 percent from August’s reading of 61.7 percent,” said Steve Miller, Chair of the ISM Services Business Survey Committee. “The New Orders Index registered 59.8 percent, 1.1 percentage points below August’s figure of 60.9 percent. The Employment Index moved into expansion territory for the first time in three months with a reading of 50.1 percent, a 2.3-percentage point increase from the 47.8 percent recorded in August.”

The Supplier Deliveries Index came in at 53.2, 1.9 percentage points higher than the 51.3 percent recorded in August. “This is the 22nd consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance,” he said. “The Prices Index registered above 70 percent for the sixth time in seven months; the reading of 74 percent in September is 1.4 percentage points above August’s figure of 72.6 percent and the highest since July 2022 (74.5 percent). The index has exceeded 60 percent for 22 straight months, and its 12-month average increased by 0.5 percentage point to 69 percent, the highest since March 2023.”

Thirteen industries indicated growth in September, the ISM noted, one more than the previous month, while four reported contraction. “The September Services PMI reading of 54.9 percent is 0.8 percentage point above the 12-month average of 54.1 percent,” Miller said. “The uptick of 0.4 percentage point over August’s 12-month average of 53.7 percent marks the ninth straight month that figure has increased.”

“Tariffs and fuel cost impacts were the most cited issues impacting respondents’ supply chains; in fact, fuel costs were mentioned twice as often as any other single issue impacting performance,” he noted. “Supply chain constraints were also a top concern of respondents and were impacting both lead times and costs. The Employment Index’s first reading above 50 percent in three months seems to have resulted from increasing backlogs, as well as high levels of business activity and new orders. Although business activity and new orders growth rates have eased a bit, the Backlog of Orders index hit its highest level since July 2022 (58.3 percent).”