Gold price struggling to catch a bid as New York Fed's Empire State survey drops to 7.6
Although gold prices are off their session lows, the market is struggling to attract safe-haven interest even as the U.S. manufacturing sector continues to struggle, according to the latest report from the New York Federal Reserve.
The regional central bank reported Tuesday that its Empire State Manufacturing Survey dropped to a reading of 7.6, down sharply from August’s reading of 20.6. According to consensus estimates, economists were expecting a reading of 14.8.
“On the heels of strong growth in August, New York State manufacturing activity continued to pick up modestly in September. Employment grew at a solid pace, while pricing pressures intensified,” said Richard Deitz, Economic Research Advisor at the New York Fed.
The gold market is not seeing much of a reaction to the disappointing manufacturing data. Spot gold last traded at $4,283.60 an ounce, down 0.34% on the day.
Although the manufacturing sector appears to be cooling, analysts have said that the weakness is not enough of a threat to stop the Federal Reserve from potentially raising interest rates on Wednesday.
Gold has struggled in recent weeks as markets see a more than 90% chance of a 25-basis-point rate hike. Expectations of higher interest rates have strengthened the U.S. dollar and pushed 10-year bond yields above 5% for the first time since before the 2008 Global Financial Crisis.
The components of the report showed broad-based cooling. The New Orders Index dropped to 2.0, down from August’s reading of 17.3. Meanwhile, the Shipments Index fell to -3.2, down from August’s reading of 11.7.
The labor market remains a bright spot for the U.S. economy. The report said its Number of Employees Index increased to 10.6, up from August’s reading of 9.3.
However, inflation pressures remain a major concern. The Prices Paid Index rose to 63.1, up from 58.6 in August.
