(Kitco News) - Gold prices are holding support above $2,600 an ounce but could face some technical selling pressure as the New York Federal Reserve reports robust growth in the region’s manufacturing sector.
On Monday, the regional central bank said its Empire State Manufacturing Survey rose to 11.5, up sharply from August’s reading of -4.7. The data was significantly better than expected, as economists had anticipated a roughly unchanged reading.
"New York State manufacturing activity in September grew for the first time in nearly a year, with shipments increasing strongly. However, employment continued to decline modestly. Firms became more optimistic that conditions would improve in the months ahead, though capital spending plans were weak," said Richard Deitz, Economic Research Advisor at the New York Fed, in the report.
The gold market is experiencing some selling pressure in neutral territory in its initial reaction to the economic data. December gold futures last traded at $2,607.80 an ounce, down 0.15% on the day.
The components of the report showed broad-based growth. The New Orders Index increased to 9.4, up from the previous reading of -7.4. At the same time, the Shipments Index rose to 17.9, up from 0.3.
The labor market improved slightly but remains in contraction territory, with the index rising to -5.7, up from -6.7 in August.
The report also indicated that price pressures were largely unchanged, with the Prices Paid Index falling slightly to 23.2, down from August’s reading of 23.4.
The economic data has done little to shift market expectations ahead of the Federal Reserve’s monetary policy decision, which will be made later this week.
Although the data reflects stable economic activity, markets are pricing in a 65% chance that the Federal Reserve will cut interest rates by 50 basis points on Wednesday. While market expectations are high, many economists have said that an aggressive move is unlikely, as the economy continues to hold up well and inflation remains relatively elevated.
