(Kitco News) - Gold prices are holding support above $4,800 an ounce even as the U.S. manufacturing sector shows some resilient strength, according to data from the New York Federal Reserve.
The regional central bank reported on Wednesday that its Empire State Manufacturing Survey rose more than expected, jumping to 11 in April, compared to March’s reading of -0.2.
The data significantly beat consensus estimates, as economists were forecasting a much smaller rise to 0.3. Manufacturing activity in the New York region has risen to its highest level since March.
“Manufacturing activity grew moderately in New York State in April. New orders and shipments increased significantly, and employment expanded. However, input price increases accelerated, supply availability is expected to worsen, and firms became less optimistic about the outlook,” said Richard Deitz, Economic Research Advisor at the New York Fed, in the report.
The gold market is not seeing much of a reaction to the latest economic data. Spot gold last traded at $4,812.30 an ounce, down 0.57% on the day.
Analysts have been keeping a close eye on the $4,800 level, with many noting that this is a clear technical area gold needs to hold to make a solid attempt to return to $5,000.
Although the stronger-than-expected economic data could impact gold’s safe-haven appeal, analysts note that it also gives the Federal Reserve further room to cut interest rates in the second half of the year, which would reduce gold’s opportunity cost as a non-yielding asset.
The components of the report showed broad-based growth. The New Orders index increased to 16.4, up from March’s reading of 6.4. At the same time, the Shipments index jumped to 20.2, up from -6.9.
The report also notes an improvement in the labor market, with the Number of Employees Index rising to 9.8, up from the previous reading of 5.8.
However, the increased activity is coming at a cost; inflation pressures jumped sharply, with the Prices Paid Index rising to 51.0, up from 36.6.
