(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 July came in at 41.4 after a reading of 10.3 in June. The data was far better than expected, as economists were looking for a reading of 13.0 this month.
“Responses to the July 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 this month, and the firms continued to report an overall increase in employment. Both price indexes remained elevated.”
“The survey’s broad indicators for future activity continued to suggest expectations for growth over the next six months, although most readings moderated,” they added.
Gold prices slid back toward the $4,000 support level in the moments after the 8:30 am ET release, and were trading at session lows. Spot gold last traded at $4,003.16 per ounce for a loss of 1.43% on the session.
The current conditions indicators improved this month. “The diffusion index for current general activity jumped 31 points to 41.4 in July, its highest reading since November 2021,” the report stated. “More than 53 percent of the firms reported increases (up from 32 percent), far exceeding the 12 percent reporting decreases (down from 22 percent); 24 percent of the firms reported no change in current activity (down from 45 percent). The index for current new orders increased 10 points to 37.0, also its highest reading since November 2021. The current shipments index rose 19 points to 33.7; its highest reading since April. Almost 45 percent of the firms reported increases in shipments, 11 percent reported decreases, and 44 percent reported no change.”
“The employment index edged up 2 points to 10.0 in July, its highest reading since December,” they noted. “The share of firms reporting increases (13 percent) exceeded the share reporting decreases (3 percent); most firms (83 percent) reported no change in employment levels this month. The average workweek index rose 21 points to 14.0, its highest reading since January 2025.”
The Philly Fed report also showed price pressures continued to rise in June.
“The prices paid index ticked up to 53.9 this month,” they noted. “More than 54 percent of the firms reported increases in input prices, while no firm reported decreases; 46 percent reported no change. The current prices received index rose 7 points to 27.4. Almost 27 percent of the firms reported increases in the prices of their own goods, none reported decreases, and 73 percent reported no change.”
The survey’s broad indicators for future activity indicated firms continue to expect growth.
“The diffusion index for future general activity fell 16 points this month to 34.4,” the report said. “Almost 52 percent of the firms expect an increase in activity over the next six months, exceeding the 17 percent that expect a decrease; 22 percent expect no change. The future new orders index fell 26 points to 35.1, and the future shipments index decreased 21 points to 39.3. The firms continue to expect increases in employment over the next six months, but the future employment index inched down 1 point to 29.5.”
“Both future price indexes declined but remained above their long-run averages: The future prices paid index moved down from 63.2 to 56.7, and the future prices received index dropped 26 points to 41.4,” they added. “The index for future capital expenditures remained elevated but fell 11 points to 30.1.”
