(Kitco News) - The gold market is starting the week with sharp losses and significantly weaker regional manufacturing data, from the New York Federal Reserve, is not providing any support for the precious metal.
Monday, the regional central bank said that its Empire State manufacturing survey's general business conditions index fell sharply to a reading of -31.3 in August, down from July’s reading of 11.1. The data missed expectations as economists were looking for the index to fall to 5.1.
Manufacturing in the New York Region has fallen to its lowest level since 2019 when activity ground to a halt at the start of the COVID-19 pandemic. The report said that this was, “the second largest monthly decline in the index on record, and among the lowest levels in the survey’s history.”
The gold market is not seeing much reaction to the latest economic data as it tries to hold support around $1,800 an ounce. December gold futures last traded at $1,796.30 an ounce, down 1% on the day.
Some economists note that the surprise drop in manufacturing could revive fears that the U.S. economy is headed for a hard landing as the Federal Reserve tightens interest rates to cool inflation pressures.
The report showed broad-based weakness within the manufacturing sector. The report said that the New Orders index dropped to -29.6, down from July’s reading of 6.2. At the same time the Shipments Index dropped to -24.1, down from the previous reading of 25.3.
The report also noted weakness in the labor market with the Number of Employees Index falling to 7.4, down from July’s reading of 18.
However, the cooling activity is also leading to falling inflation pressures. The report said that the Prices Paid Index fell to 55.5, down from the previous reading of 65.3.
