Gold Prices Holding Near Five-Year High Following Near 0 Reading in Philly Fed Survey
(Kitco News) - Gold prices have dropped but are holding on to its recent gains after the index for current general activity in the Philadelphia Federal Reserve's manufacturing business outlook survey dropped to nearly zero in June.
The latest report said that sentiment in the region's manufacturing sector fell to 0.3%. The consensus expectations compiled by news organizations were expecting a reading of somewhere around 10.6.
Gold prices are off their highs but still trading near a five-year high after the Federal Reserve suggested that it is ready to cut interest rates to support slowing economic growth. The latest manufacturing data will support expectations for a rate cut as early as July. August gold futures last traded at $1,386 an ounce, up 2.76% on the day.
There has not been a lot of positive news for the manufacturing sector this week. Monday the New York Fed said its manufacturing index saw the biggest drop in its history, falling to a reading of negative 8.6 in June, down from May's reading of 17.8. Consensus forecasts were calling for a decline to 12.1.
Looking at the components of the report, new orders dropped to a reading of 8.3, down from May's reading of 11; meanwhile, the shipments index dropped to 16.6, compared to May's reading of 27.6.
The labor market also appears to be losing momentum with the number of employees index dropping to 15.4, down from May's reading of 18.2.
The report also showed a significant drop in inflation pressures with the prices paid index falling to 0.6, down from May's reading of 17.5.