Gold Falls, Crypto Rises After PMI Shows Slowdown in Growth

Gold slump follows report showing US service provider and manufacturer activity in September grew at the slowest pace in 12 months.

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key takeaways

  • Sluggish growth likely due to a decrease in demand and heightened supply chain issues
  • IHS Markit data revealed that business activity pace is at its slowest in a year

Gold fell to session lows, Thursday, after IHS Markit data revealed that Unites States business activity grew at the slowest pace in a year in September, mostly due to supply chain disruptions and capacity shortages, the economic data provider said. Cryptocurrencies were mostly trading higher Thursday morning. 

The IHS Markit flash composite index of purchasing managers at service providers and manufacturers was 54.5 in September, down from 55.4 in August, the report noted. Any reading higher than 50 shows growth in the sector, and readings have declined each month for the past year. 

“The slowdown was led by a cooling of demand in the service sector, linked in part to the delta variant spread,” Chris Williamson, chief business economist at IHS Markit, said in a statement. “However, while manufacturers have seen far more resilient demand, factories face growing problems in sourcing enough supplies and labor to meet orders.” 

The flash services business activity index came in at 54.4 this month, down from 55.1 in August — a 14-month low.

“Contributing to the softer increase in activity was a slower rise in new business,” the report said. “Though solid, the rate of growth slowed for the fourth month running amid less robust demand conditions and ongoing COVID-19 worries.” 

Inflation is on the rise, experts at IHS Markit warned, noting that the rate of cost inflation was the quickest for four months, and the second-highest on record. Researchers at the firm cite supply chain disruptions and material shortages for increased prices and transportation costs. 

Gold was trading about 1% lower at the time of publication, while bitcoin and ether were up 2% and 3%, respectively. US equities were trading 1% higher. 

The United States manufacturing Purchasing Managers Index for September fell to a reading of 60.5, down from the August reading of 61.1.


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