(Kitco News) - The gold market is trading lower after the Philadelphia Federal Reserve's manufacturing sector survey popped back into positive territory this month.
On Thursday, the regional central bank said its manufacturing business outlook for September rose to 1.7, compared to August’s negative reading of -7.0. The data was better than expected as economists were looking for a reading of -1.0 this month.
“The survey’s indicator for current general activity turned positive, while the indexes for new orders and shipments declined and turned negative,” the report said. “The employment index rose and suggested increases in employment overall. Both price indexes moved higher and continue to indicate overall increases in prices. The firms continue to expect growth over the next six months, with expectations more widespread this month.”
Gold prices declined sharply in the minutes following the manufacturing data release, which came out at the same time as weekly jobless claims. Spot gold last traded at $2,575.94, up 0.65% on the day after trading as high as $2,594.94 earlier this morning.
The key components of the index were a mixed bag this month. “The indexes for new orders and shipments declined and turned negative,” the report said. “The new orders index fell 16 points to -1.5. The shipments index declined 23 points to -14.3, its lowest reading since March 2023.”
However, firms reported an increase in employment, on balance, after reporting an overall decline last month.
“The employment index rose from -5.7 to 10.7 this month, the index’s second positive reading in the last three months following mostly negative readings since March 2023,” the report said. “More than 89 percent of the firms reported no change in employment levels this month, the highest share reporting steady employment since December 1978. Nearly 11 percent of the firms reported increases, while none reported decreases. The average workweek index declined from -2.3 to -13.6.”
The Philly Fed report also showed stubbornly high inflation pressures.
“On balance, the firms continued to report overall increases in prices,” they wrote. “The prices paid index moved up 10 points to 34.0, its highest reading since December 2022. Thirty-four percent of the firms reported increases in input prices, while none reported decreases; 66 percent of the firms reported no change. The current prices received index rose 11 points to 24.6, undoing its decrease from last month. Nearly 25 percent of the firms reported increases in prices received for their own goods, none reported decreases, and 75 percent reported no change.”
The survey’s broad indicators for future activity suggest more widespread expectations for growth over the next six months.
