(Kitco News) - The gold market is trading not far from the $2,950 resistance level after the Philadelphia Federal Reserve's manufacturing sector survey declined in line with expectations this month.
On Thursday, the regional central bank said its manufacturing business outlook for February fell to 18.1, compared to January’s reading of 44.3. While the headline number was significantly lower than the prior reading, the data was slightly better than expected as economists were looking for a reading of 16.3 this month.
“Responses to the February Manufacturing Business Outlook Survey suggest regional manufacturing activity continued to expand this month,” the report said. “The indicators for current activity, new orders, and shipments remained elevated. On balance, the firms indicated an increase in employment, and the price indexes remained above their long-run averages. The survey’s broad indicators for future activity suggest expectations for growth over the next six months.”
Gold prices held fairly steady in the minutes following the manufacturing data release, which came out at the same time as weekly jobless claims. Spot gold last traded at $2,941.97 and is up 0.30% on the day.
The key components of the index moderated but remained in positive territory this month. “Almost 41 percent of the firms reported increases in general activity this month (down from 51 percent last month), while 23 percent reported decreases (up from 7 percent); 35 percent reported no change (down from 41 percent last month),” the report said. “The indexes for new orders and shipments also declined but remained elevated relative to their long-run averages: The new orders index dropped 21 points to 21.9, and the shipments index fell 15 points to 26.3.”
The employment index remained positive but still declined 7 points to a reading of 5.3. “Nearly 85 percent of the firms reported no change in employment levels this month, while the share of firms reporting increases (10 percent) exceeded the share reporting decreases (5 percent),” they noted. “The average workweek index fell from 20.5 to 2.9.”
The Philly Fed report also showed prices rising well above their long-run averages, with both price indexes delivering their highest readings in over two years.
“The prices paid index increased 9 points to 40.5, its highest reading since October 2022,” the report said. “Over 45 percent of the firms reported increases in input prices, while 5 percent reported decreases; half of the firms reported no change. The current prices received index moved up 3 points to 32.9, its highest reading since November 2022. Almost 34 percent of the firms reported increases in prices received for their own goods, 1 percent reported decreases, and 66 percent reported no change.”
The survey’s broad indicators for future activity also declined, though the future price projections moderated as well. “The diffusion index for future general activity declined from 46.3 to 27.8 in February,” the report noted. “The future new orders and shipments indexes both declined 24 points, to 33.1 and 36.5, respectively. The future prices paid index declined from 67.3 to 58.6, and the future prices received index declined from 53.6 to 46.1.”
