Spot gold at $4,667/oz after ISM Services PMI falls to 54 in March as Iran price shocks raise concern

Spot gold held near the middle of its intraday range after the U.S. ISM Services PMI fell to 54.0 in March from 56.1, slightly below the 55.0 consensus, while gold last traded at $4,667.05/oz, down 0.20% on the day. The report reinforced a mixed macro tape: service activity remained expansionary, but the slowing and the rise in the ISM Prices Index fed concerns that higher energy costs from Iran-related disruptions are starting to work through the economy. ISM chair Steve Miller said the prices component rose as expected on higher oil and fuel costs, while comments from purchasing managers were dominated by “impacts and adjustments due to the conflict with Iran” and the expected pass-through of higher oil prices. Six of ten subindexes fell month-on-month, and the Employment Index dropped to 43.5, its lowest since December 2023, even as business activity, new orders and backlog remained firm. LPL’s Jeffrey Roach said the mix of stronger orders and higher prices shows a “tipping point” risk for growth and inflation, with a prolonged Strait of Hormuz disruption into May/June likely to worsen the outlook. For gold, the near-term read is supportive on the inflation/geopolitics channel, but not decisively so: the services sector is still expanding, and the Fed remains in wait-and-see mode after last Friday’s payrolls. The next catalyst is whether oil and shipping disruptions continue long enough to lift inflation expectations and keep real-rate pressure contained; if so, bullion should remain bid on dips. If the data starts to weaken further, gold may get an additional macro hedge bid from recession fears, but for now the move is more of a holding pattern than a breakout trigger.