Gold prices drive higher above $4,300 as Empire State Survey showed contraction in manufacturing sector
The gold market is finding new support above $4,300 and could attract some safe-haven flow as the U.S. manufacturing sector remains extremely volatile, according to the latest data from the New York Federal Reserve.
The regional central bank reported Monday that its Empire State Manufacturing Survey dropped to -3.9 in December, down sharply from November’s one-year high of 18.7. The data significantly missed expectations, as economists were looking for a print of 9.8.
“Manufacturing activity contracted slightly in New York State in December after rising over the prior two months. Price increases slowed for a second consecutive month but remained elevated. Firms became increasingly optimistic about the outlook for the months ahead, said Richard Deitz, Economic Research Advisor at the New York Federal Reserve.
The gold market is seeing solid momentum in its initial reaction to the disappointing economic data, adding to gains made overnight. Spot gold last traded at $4,339 an ounce, up nearly 1% on the day.
The components of the report showed broad-based weakness. The New Orders Index dropped to 0, down from 15.9; at the same time, shipments fell to -5.7, down from November’s reading of 16.8.
However, the slowing economic data is having an impact on inflation. The Prices Paid Index fell to 37.6, down from the previous reading of 49.
