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Gold price retraces off of its losses as Empire State drops to -32.9 in January

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(Kitco News) - Recession fears are helping revive safe-haven interest in gold as prices reverse their losses following a sharp drop in the New York Federal Reserve's regional manufacturing survey.

Tuesday, the regional central bank said that its Empire State Survey fell to -32.9, down from December's reading of -11.2. The data significantly missed expectations, as economists were looking for a reading of around -8.9.

Activity in the manufacturing sector fell to its lowest level since mid-2020 when the economy shut down because of the global COVID-19 pandemic. The report said this was the survey's fifth worst reading.

"Eleven percent of respondents reported that conditions had improved over the month, and forty-four percent reported that conditions had worsened," the report said.

The gold market continues to see some selling pressure, but prices are off their lows following the disappointing economic data. February gold futures last traded at $1,915.20 an ounce, down 0.34% on the day.

The components of the report showed broad-based weakness.

The New Orders Index dropped to -31.1, down from the previous reading of -3.6. At the same time, the Shipments index dropped to -22.4, down from December's reading of 5.3.

The report also showed a significant drop in momentum, with the Number of Employees Index falling to 2.8, down from December's reading of 14.

Although inflation pressures have fallen, the report notes that producer prices remain elevated. The report said that the Prices Paid Index dropped to 33, down from December's reading of 50.5.

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