(Kitco News) – The gold market is trading near flat on Thursday morning after the Philadelphia Federal Reserve's manufacturing sector survey improved but remained in contractionary territory this month.
The regional central bank said its manufacturing business outlook for November came in at -1.7 after a reading of -12.7 in October. The data was better than expected, as economists were looking for a reading of -3.1 this month.
“Manufacturing activity in the region weakened this month, according to the firms responding to the November Manufacturing Business Outlook Survey,” the report said. “The current general activity index rose but remained negative, while the new orders and shipments indexes both turned negative. The employment index continued to suggest overall increases. Both price indexes continued to suggest overall price increases. Expectations for growth over the next six months were more widespread.”
Gold rose in the minutes following the better-than-expected manufacturing data - which was released at the same time as September nonfarm payrolls and weekly jobless claims - but prices were unable to break above $4,100 and have since trended in a narrowing $20 channel near flat on the session.
Spot gold last traded at $4,076.14 per ounce for a gain of 0.04% on the day.
Most of the key components of the index weakened in November. “The new orders and shipments indexes both declined and turned negative,” the report stated. “The new orders index fell 27 points to -8.6, its lowest reading since April, and the shipments index dropped 15 points to -8.7, its first negative reading since May.”
The employment picture improved in the region with the employment index ticking up 1 point to 6.0. “Most firms continued to report no change in employment levels (75 percent), while the share of firms reporting increases (16 percent) exceeded the share reporting decreases (10 percent),” they said. “The average workweek index fell from 12.8 to 3.7.”
The Philly Fed report also showed prices continued to rise on balance.
“The prices paid index remained well elevated and increased 7 points to 56.1,” they wrote. “Most firms (59 percent) reported increases in prices paid, 3 percent of the firms reported decreases, and 39 percent reported no change. The current prices received index fell 9 points to 17.7, more than offsetting last month’s increase, and remained above its long-run average.”
The survey’s broad indicators for future activity indicated growth expectations were more widespread this month.
“The diffusion index for future general activity increased from 36.2 to 49.6, its highest reading in a year,” the report said. “The future new orders index rose to 55.6, its highest reading since January, and the future shipments index was unchanged at 48.4. Both future price indexes remained elevated and moved higher. The future capital expenditures index ticked up 2 points to 26.7.”
