(Kitco News) - The gold market has retreated from its session highs but remains in positive territory, finding support after the Philadelphia Federal Reserve reported weaker-than-expected manufacturing activity in its region.
On Thursday, the regional central bank announced that its manufacturing business outlook for November dropped to -5.5, compared to October’s reading of 10.3. The data was disappointing, as economists had expected a reading of 7.4.
This marks the report’s second negative reading this year.
“The survey’s indicator for current general activity turned negative, while the indexes for new orders and shipments declined but remained positive. The employment index turned positive, suggesting an overall increase in employment,” the report noted.
The gold market is experiencing mixed activity as it consolidates above $2,650 per ounce. Spot gold last traded at $2,664.50 per ounce, up 0.56% on the day.
Although manufacturing data was disappointing, gold could face some selling pressure due to weekly jobless claims indicating that the U.S. labor market remains fairly resilient.
The components of the report showed broad-based weakness. The New Orders Index fell to 8.9, down from October’s reading of 14.2. Meanwhile, the Shipments Index declined to 4.5 in November, down from the previous reading of 7.4.
The labor market remains the one bright spot in the economy. The report noted that the Number of Employees Index rose to 8.6, up from -2.2 in October.
Positive for gold, inflation pressures appear to be easing. The Prices Paid Index fell to 26.6, down from 29.7 in the previous month.
Some economists suggest that slowing economic activity and declining inflation pressures will support the Federal Reserve’s easing cycle, with markets anticipating another 25-basis-point rate cut in December.
However, the resilient strength of the labor market will likely prevent the central bank from making any aggressive policy moves.
