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Gold price remains stuck at $1,800 as New York Fed reports -11.6 reading in Empire State Survey

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(Kitco News) - The gold market remains under pressure but is holding support above $1,800 an ounce as it sees little bullish momentum following weaker than expected regional manufacturing data from the New York Region.

Monday, the New York Federal Reserve said that its Empire State manufacturing survey's general business conditions index dropped to a reading of -11.6 in May, down from April’s reading of 24.6. The data significantly missed expectations as consensus forecasts were looking for a reading of around 15.3.

The gold market is not seeing any major reaction to the latest disappointing economic data. June gold futures last traded at $1,805.40 an ounce, down 0.15% on the day.

The New York manufacturing sector has been fairly volatile in recent months but the broader picture shows growing weakness as activity has missed expectations four out of the last six months.

Economists have noted that the U.S. manufacturing sector continues to struggle as issues remain in the global supply chain. Problems have been exacerbated by Russia’s ongoing invasion of Ukraine.

The report highlighted broad-based weakness in the region’s manufacturing sector. Looking at the components of the report, new orders dropped to -8.8, down from April’s reading at 25.1. At the same time shipments dropped to -15.4, down from the previous level of 34.5.

“Shipments fell at the fastest pace since early in the pandemic,” the report said.

The one bright spot in the report was continued gains in the labor market. The report said that the employee index increased to 14, up from April’s reading at 7.3.

Although inflation pressures dropped slightly this month, the report noted that prices are still elated. The Prices paid index dropped to 73.7, down from April’s reading of 86.4.

The report also noted that future expectations have diminished compared to strong optimism at the start of the year.

“As in April, firms expressed less optimism about the six-month outlook than they did earlier this year,” the report said. “The capital expenditures index fell to its lowest level in several months.”

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