(Kitco News) - The gold market is holding on to initial support around $2,650 an ounce but is not seeing any significant bullish momentum after the New York Federal Reserve reported weaker-than-expected activity in the region’s manufacturing sector.
On Monday, the regional central bank said its Empire State Manufacturing Survey dropped to 0.2, down sharply from November’s reading of 31.2. According to consensus estimates, economists were looking for a slightly better reading of 6.4.
“On the heels of a strong November, manufacturing activity held steady in New York State in December. The pace of price increases moderated, and employment declined modestly. Firms were fairly optimistic about future conditions.” ~Richard Deitz, Economic Research Advisor at the New York Fed said in the report.
The gold market is holding in positive territory but is not attracting any new momentum in its initial reaction to the disappointing and volatile data. Spot gold last traded at $2,659.50 an ounce, up 0.49% on the day.
According to some economists, the latest economic data paints a difficult picture for the Federal Reserve as economic activity slows but inflation remains stubbornly elevated.
Looking at some of the components of the report, the New Orders Index dropped to 6.1 points, down from November’s reading of 28 points. At the same time, the Shipments Index dropped to 9.4, down from 32.5 points reported last month.
The labor market within the region’s manufacturing sector also cooled sharply last month; The Number of Employees Index dropped to -5.8 points, down from November’s reading of 0.9.
Although inflation pressures have dropped the report noted that they still remain fairly elevated. The Price Paid Index fell to 21.1 points down from November’s reading of 27.8.
