(Kitco News) – The gold market has bounced higher after the New Yorker Federal Reserve reported a contraction in its regional manufacturing activity.
Tuesday the regional central bank said that its Empire State Manufacturing Survey fell into negative territory for January, dropping to -.7, down significantly from a reading of 31.9 in December. The data was significantly weaker than expected. According to consensus forecasts, economists were expecting to see a reading of around 25.
“Manufacturing activity was little changed in New York State according to the January survey, suggesting that growth stalled after a period of significant expansion,” the report said.
The gold market caught a bid following the disappointing manufacturing data. Spot gold last traded at $1,1818 an ounce, relatively unchanged on the day. Prior to the data gold prices were trading heavily in negative territory.
Some economists have noted that the COVID-19 pandemic continues to disrupt economic activity. However, the report noted that businesses remain optimistic that the economy will continue to recovery through the year.
“Looking ahead, firms remained optimistic that conditions would improve over the next six months,” the report said.
Looking at components of the report, the new orders index also posted a steep decline, falling thirty-two points to -5.0. Meanwhile, the region’s labor market also slowed, with the index for number of employees falling five points to 16.
Positive for the gold price, the report highlighted the ongoing inflation threat.
“The prices paid index edged down four points to 76.7, and the prices received index fell eight points to 37.1, signaling ongoing substantial increases in both input prices and selling prices, though at a slower pace than last month,” the report said.