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Gold prices holding gains following strong rise in Philly Fed, New York Fed manufacturing data

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(Kitco News) - The gold market is holding gains around $1,750 an ounce even as regional Federal Reserve Banks report strong sentiment within the manufacturing sector.

The Philly Fed said its manufacturing business outlook rose to a reading of 50.2 in April, down from its March reading of 51.8. Howevern, the data significantly beat expectations as consensus forecasts were calling for a reading around 41.

"The firms’ responses continued to suggest widespread growth in the region’s manufacturing sector this month. The survey’s indicators for activity, employment, new orders, and shipments all remain elevated, with the former two indexes reaching long-term highs," the report said.

Meanwhile the New York Fed said its Empire State Survey rose to a reading of 26.3 in April, up from the previous reading of 17.4. Economists were expecting to see a reading of around 19.3.

The New York Fed noted that the index is well above levels seen before the U.S. economy was devastated by the COVID-19 pandemic.

The positive economic data is having little impact on gold prices. June gold futures last traded at $1,751.10 an ounce, up 0.81% on the day.

Although both regional central banks reported robust growth in the manufacturing sector, they also noted rising inflation pressures.

The New York said its Prices Paid Index rose to a reading of 74.7, its highest level since 2008. Meanwhile the Philly Fed said that its Prices Paid Index dropped four points to to 69.1 in April after reaching a 40-year high in March.

“Over 71 percent of the firms reported higher input prices this month, while only 2 percent of the firms reported lower input prices,” the report said.

Market analysts have noted that inflation remains an important support for gold prices. Although bond yields can continue to rise, if inflation keeps up it means that real interest rates will remain at historically low levels.

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