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Gold prices stuck in neutral as New York Fed's Empire State Manufacturing Survey hits eight-month high at 10.8
By: Neils Christensen | April 17, 2023

The U.S. manufacturing sector remains fairly volatile as the New York Federal Reserve reported a robust recovery in April.

Monday, the regional central bank said that its Empire State manufacturing survey's general business conditions index rose to 10.8 in April, up from March's negative reading of 24.6. The data significantly beat expectations as economists were looking for the index to rise to -17.7.

Activity in the New York manufacturing sector has risen to an eight-month high.

The better-than-expected data is keeping a lid on gold prices as the market treads water at the start of the week. June gold futures last traded at $2,015.20 an ounce, roughly unchanged on the day.

According to analysts, the latest economic data is helping to solidify expectations that the Federal Reserve will raise interest rates next month. The CME FedWatch Tool shows markets see a more than 80% chance of a 25-basis point move. Markets are also pushing back their calls for a rate hike to later in the second half of this year.

These shifting interest rate calls are pushing bond yields higher and supporting the U.S. dollar as it continues to recover from last week's selloff to a 12-month low.

The report noted broad-based improvements in the survey components. The New Orders Index rose to 25.1 from March's -21.7 reading. At the same time, the sector's labor market improved, rising to -8.0, up from the previous reading of -10.1.

While activity has improved, the report noted that inflation pressures continue to moderate. The Prices Paid Index fell to 33.0, down from 41.9 in March.

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