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Gold prices struggled to attract haven demand Tuesday even after a closely watched New York Federal Reserve report showed that manufacturing activity cooled sharply in September.

Bullion moved above its session lows, but the disappointing economic figures failed to generate much buying interest.

The New York Fed said its Empire State Manufacturing Survey fell to 7.6 in September from 20.6 in August. The result also came in well below the consensus estimate of 14.8, showing a more pronounced slowdown than economists had expected.

Despite the sharp decline in the headline reading, the survey still indicated that manufacturing activity in New York State continued to increase modestly.

Employment advanced at a solid pace, while businesses faced intensifying pricing pressures.

Richard Deitz, Economic Research Advisor at the New York Fed, characterized the results in the report.

“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 weaker manufacturing data did little to change the direction of the gold market. Spot gold last traded at $4,283.60 an ounce, leaving the precious metal down 0.34% on the day.

Gold’s muted response showed that the disappointing survey was not enough to spark meaningful haven interest. Although prices recovered from their session lows, the metal continued to struggle to catch a bid following the report.

Analysts said the manufacturing weakness did not represent enough of a threat to prevent the Federal Reserve from potentially raising interest rates on Wednesday. That outlook remained an important pressure point for gold as traders assessed the central bank’s next move.

Markets saw a greater than 90% chance that the Federal Reserve would raise rates by 25 basis points.

Expectations for higher borrowing costs strengthened the U.S. dollar and created another obstacle for a sustained recovery in bullion prices.

Bond yields also climbed as investors prepared for the possibility of tighter monetary policy.

The yield on the 10 year bond moved above 5% for the first time since before the 2008 Global Financial Crisis, adding to the difficult environment confronting gold.

Details within the Empire State report revealed broad based cooling across manufacturing activity. The New Orders Index dropped to 2.0 in September after registering 17.3 in August, marking a steep retreat in the measure.

The Shipments Index weakened even more dramatically, falling to minus 3.2 from an August reading of 11.7. The drop added to evidence that momentum within the regional manufacturing sector had diminished after the stronger results recorded a month earlier.

Employment remained a brighter part of the survey and offered some support to the broader economic picture. The Number of Employees Index increased to 10.6 from 9.3 in August, indicating that hiring conditions held up even as other measures cooled.

Pricing conditions provided a less reassuring signal. The Prices Paid Index rose to 63.1 from 58.6 in August, showing that inflation pressures intensified while the broader manufacturing survey lost momentum.

That combination left markets confronting softer manufacturing activity alongside persistent price pressures and continued employment growth.

According to analysts cited in the report, the weakness was not severe enough to derail expectations for a possible Federal Reserve rate increase.

For gold, the immediate market verdict remained unforgiving. The survey missed economists’ forecast, orders and shipments weakened, and the headline index tumbled, yet bullion still failed to secure the kind of haven demand that disappointing economic data can sometimes attract.

The focus therefore remained on Wednesday’s potential interest rate decision and the market forces already weighing on the metal.

A stronger U.S. dollar, bond yields above 5%, and expectations for a 25 basis point increase continued to overshadow the weaker regional manufacturing report.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.