(Kitco News) - The gold market is trading near session lows after the Philadelphia Federal Reserve's manufacturing sector survey disappointed market forecasters this month.
On Thursday, the regional central bank said its manufacturing business outlook for May declined to 4.5, compared to April’s reading of 15.5. The data was significantly worse than expected as economists were looking for a reading of 8 this month.
"The survey’s indicators for current general activity, new orders, and shipments all declined, with the latter two turning negative," the report said. "The employment index suggests declines in employment overall. Both price indexes indicate overall increases in prices but remain below their long-run averages. The firms continue to expect growth over the next six months."
Gold prices fell to session lows in the minutes following the manufacturing data release. Spot gold last traded at $2,381.82, near the bottom of its daily range and down 0.16% on the day.
The key components of the index fell substantially this month. "The index for new orders declined from 12.2 to -7.9, its first negative reading since February, and the shipments index fell from 19.1 to -1.2, its first negative reading since January," they wrote.
Although employment indicators rose, firms continued to report a decline in overall employment. The employment index rose 3 points to -7.9, with two-thirds of the firms reporting no change in employment levels this month. "The average workweek index rose 10 points but remained negative at -8.3," they noted.
The report showed mixed results on inflation pressures. The prices paid index declined 4 points to 18.7 in May, while the current prices received index ticked up 1 point to 6.6.
"Responses to the May Manufacturing Business Outlook Survey suggest softer regional manufacturing activity this month," the Philly Fed wrote. "On balance, the firms indicated a decline in employment, and price indexes were below their long-run averages. The survey’s broad indicators for future activity continued to suggest widespread expectations for growth over the next six months."
