(Kitco News) - Easing recession fears could be taking their toll on the gold markets, with prices trading near session lows after the New York Federal Reserve reported better-than-expected activity within its region's manufacturing sector.
Wednesday, the regional central bank said its latest Empire State manufacturing survey's general business conditions index rose to -5.8, up from January's reading of -32.9. The data significantly beat expectations, as economists were looking for a reading of -18.2.
"After falling steeply last month, manufacturing activity continued to decline in New York State, according to the February survey. The general business conditions index climbed twenty-seven points but held below zero," the report said. "Twenty-six percent of respondents reported that conditions had improved over the month, and thirty-two percent reported that conditions had worsened."
The gold market is unable to find any bullish traction following the positive economic data. April gold futures last traded at $1,844 an ounce, down 1.15% on the day.
Although activity in New York's manufacturing sector remains in contraction territory, the report noted broad-based improvement. The New Orders Index rose to -7.8, up from January's reading of 31.1; at the same time, the Shipments Index rose to 0.1, up from the previous level of -22.4.
The region's labor market was one weak spot, with the Number of Employees Index falling to -6.6, down from January's reading of 2.8.
While economic activity has been more resilient than expected, some economists note that this growth is coming at a cost as inflation pressures rise. The report said that the Prices Paid Index rose to 45, up from January's reading of 33.
Economists and market analysts have noted that persistently higher inflation could force the Federal Reserve to maintain its aggressive monetary policies throughout the year. Markets are already starting to price in the Fed Funds rate peaking above 5% by the summer.
