Gold Ignores Strong Drop In New York Manufacturing Data
(Kitco News) - Gold prices are relatively unchanged, down from their overnight session highs despite a surprising drop in sentiment in the New York manufacturing sector.
Monday the New York Federal Reserve said the general business conditions index in its Empire State manufacturing survey fell to a reading of 5.2 in April, following March’s reading of 16.4. Economists were expecting to see a reading of 15.2.
“Business activity expanded at a slower pace than in the prior two months. Although the general business conditions index remained above the levels seen through most of 2016,” the report said.
Gold prices are relatively flat on the day following the data, last trading at $1,288.90 an ounce.
According to the report, the weaker-than-expected decline was the result of a drop in the New Orders Index, which dropped to 7 after hitting a multi-year high last month of 21.3. Looking at the other components of the report, shipments rose to 13.7 in April, up from the previous reading of 11.3 at the same time there was a build in inventories with the index rising to 6.3, compared to March’s reading of -2.7.
The manufacturing sector is also adding jobs as the Number of Employees Index rose to 13.9, up from March’s reading of 8.8.
A positive for gold, is that the report shows rising inflation with increase in both the Prices Paid and Prices Received Index.
Looking ahead, the weaker-than expected data could put pressure on the Federal Reserve to leave interest unchanged following the June meeting. In a recent interview with Kitco News, Nick Exarhos, senior economist at CIBC World Markets said that most analysts have written off first quarter growth as lackluster; however, he said that there is still a lot of uncertainty for the second quarter. If the data is weaker than expected it could force the Fed to the sidelines for the rest of the year.