News Bites
Gold prices near session highs as Philly Fed Survey disappoints with 2.6 print
(Kitco News) - Weak economic data is having some impact on the gold market as prices push to session highs following disappointing manufacturing data from the Philadelphia Federal Reserve.
Thursday, the regional central bank said its manufacturing business outlook fell to 2.6 in May, down sharply from April's reading of 17.6. The data missed expectations as consensus forecasts called for a drop to around 14.9.
The report noted that activity in the manufacturing sector has fallen to its lowest level in two years.
The decline in the Philly Fed Survey comes after the New York Federal Reserve said its manufacturing sector contracted in May, falling to -11.6.
The disappointing data is helping to push gold prices to a critical resistance point. June gold futures last traded at $1,837.10 an ounce, up more than 1% on the day.
While the headline number was disappointing, the components of the report showed mixed health. The report said that the new orders index rose to 22.1, up from April's reading of 17.8. At the same time, the Shipments Index rose to 35.3, up from the previous level of 19.1.
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The labor market lost some momentum, with the Number of Employees Index falling to 38.7, down from April's reading of 41.4.
Important for the gold market, which is seen as a traditional hedge against inflation, the report noted stubbornly high price pressures. The Price Paid Index fell to 78.9, down from the previous level of 84.6.
While economists are looking for inflation to peak in the first half of this year, the report noted that businesses see price pressures continuing to rise.
"In this month's special questions, the firms were asked to forecast the changes in prices of their own products and for U.S. consumers over the next four quarters. The firms' median forecast for the rate of inflation for U.S. consumers over the next year was 6.5 percent, up from 5.0 percent from when the question was last asked in February," the report said.
