(Kitco News) – Gold prices are selling off on Thursday morning after the Philadelphia Federal Reserve's manufacturing sector survey improved beyond expectations this month.
The regional central bank said its manufacturing business outlook for January came in at 12.6 after a reading of -8.8 in December. The data was far better than expected, as economists were looking for a negative reading of -2.0 this month.
“Responses to the January Manufacturing Business Outlook Survey suggest overall expansion in the region’s manufacturing activity,” the report said. “The indicators for current activity, new orders, and shipments all rose, with the current activity index turning positive this month. On balance, the firms continued to indicate overall increases in prices, and both price indexes remained well above their long-run averages. The firms also continued to report higher employment levels, although the employment index edged lower.”
“Most of the survey’s broad indicators for future activity declined but continued to suggest expectations for growth over the next six months,” they added.
Gold prices slid back below the $4,600 support level in the moments after the 8:30 am EST release, and were trading at session lows 20 minutes later. Spot gold last traded at $4,587.53 per ounce for a loss of 0.84% on the session.
Many of the current conditions indicators improved this month. “Both the indexes for current new orders and current shipments also rose in January,” the report noted. “The new orders index rose 9 points to 14.4, and the shipments index increased 6 points to 9.5. Meanwhile, the inventories index fell 17 points to -8.4, its lowest level since July 2024.”
“On balance, the firms continued to report an increase in employment, although the employment index declined 3 points to 9.7 in January,” they said. “Almost 70 percent of the firms reported no change in employment levels this month (down from 83 percent last month); nearly 20 percent reported increases (up from 14 percent), while 10 percent reported decreases (up from less than 1 percent). The average workweek index similarly moved lower, declining from 12.5 to 9.1.”
The Philly Fed report also showed price pressures continued on balance.
“On balance, the firms continued to report overall increases in prices,” they said. “The prices paid index edged down 2 points to 46.9 in January, its second consecutive decrease and its lowest level since June.”
“The current prices received index ticked up 2 points to 27.8,” they added. “Over 31 percent of the firms reported increases in the prices of their own goods, 3 percent reported decreases, and 66 percent reported no change.”
The survey’s broad indicators for future activity indicated growth expectations also weakened this month.
“The diffusion index for future general activity declined from a revised reading of 38.1 in December to 25.5 in January, its lowest reading since July,” they said. “Nearly 35 percent of the firms expect an increase in activity over the next six months, exceeding the 9 percent that expect a decrease; 37 percent expect no change. The future new orders index fell 6 points to 32.9, while the future shipments index ticked up 1 point to 40.8.”
“On balance, the firms continue to expect increases in employment over the next six months, and the future employment index rose 4 points to 28.8,” the report said. “Both future price indexes were well above their long-run averages: The future prices paid index rose 2 points to 66.6; the future prices received index moved up 5 points to 61.8. The index for future capital expenditures edged up 1 point to 30.3.”
