Surveys say boom, factories say stall: gold reclaims $4,400 after the Fed’s first hike since 2023

Hard data breaks ranks with the surveys

The Federal Reserve’s industrial production report this morning delivered the number the surveys said would not come. Manufacturing output fell 0.3% in August, against a consensus that expected a 0.3% gain, the largest monthly drop since October 2025. Total industrial production was unchanged after a 0.2% rise in July, held up only by utilities (+1.8%) and a small gain in mining (+0.1%).

The weakness sat in the heavy end of the economy. Durable manufacturing fell 0.5%, nondurables were flat, and business equipment output dropped 0.5% after a 1.0% gain in July, although it is still 7.1% above a year ago. Capacity utilization held at 76.3%, 3.1 points below its 1972–2025 average, while manufacturing utilization slipped to 75.7%. Compared with a year earlier, total output is up 1.4% and manufacturing only 0.9%.

The surveys are still celebrating

Set that against what purchasing managers have been reporting. The ISM manufacturing PMI stood at 54.6 in August, the eighth consecutive month of expansion, and its production index was 58.3, a reading that normally describes a factory sector running hot. This week the Philadelphia Fed’s September survey beat forecasts, at 37.8 against 30.5 expected.

A 58 on production and a fall in actual production in the same month is a genuine contradiction, and ZeroHedge was quick to ask whether the surveys have simply stopped being useful. There are at least two mechanical reasons for the gap:

• Surveys measure breadth, not size. A diffusion index counts how many firms report higher activity versus lower. It says nothing about how much output rose or fell.
• Supply stress lifts the PMI. Slower supplier deliveries add to the headline index, on the logic that they usually signal strong demand. In August the supplier deliveries index rose to 59.3 while new orders fell 3.0 points to 53.7 and backlogs 3.2 points to 51.8. The ISM’s own committee chair, Susan Spence, noted that pricing volatility appeared in 57% of negative comments, longer lead times in 46%, the Iran war in 30% and tariffs in 29%.

Read that way, part of this year’s survey strength is the energy shock showing up as delays and higher prices, with the prices index unchanged at a very high 71.1, rather than as extra output.

The Fed hiked into the gap

Two days before the data, the FOMC raised rates by 25 basis points to 3.75%–4.00%, unanimously and for the first time since July 2023. The statement described economic activity as “expanding at a solid pace” and said the move “will support a timelier return” to the 2% goal.

The projections were firmly hawkish. The median dot puts the funds rate at 4.1% at the end of 2026, one more hike this year: twelve of eighteen officials see exactly one more, four see two, and only two see none. The median projection for PCE inflation this year is 3.7%, with core at 3.4%, while growth is pencilled in at 2.3% and unemployment at 4.1%.

This morning’s factory numbers do not fit the phrase “solid pace” very comfortably. One soft month will not change a committee looking at 3.7% inflation, but a second one, alongside the softer new orders already visible in the ISM, would start to make the extra hike the dot plot pencils in for the rest of the year look optional rather than certain. That is exactly the debate gold wants.

Gold back at $4,400

Gold has made the most of it. XAU/USD reached $4,400 today, its second day of gains, after bouncing from below $4,250 earlier in the week, and is on course to end a three-week losing streak. The hike itself was a headwind; what followed was not, as longer-dated Treasury yields pulled back after the decision.

Oil is helping too. Brent fell about 3% on Wednesday and settled at $104.82 on Thursday, down another $1.01, as Saudi Arabia offered extra cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port and worked to restore about half of the damaged East-West pipeline’s capacity. That is a long way below Monday morning’s $108 and takes some of the inflation pressure off the Fed’s next step.

Market impact

Level	Zone
200-day average	$4,541
Resistance 2	$4,510
Resistance 1	$4,450
Session low	$4,335
Support	$4,223 – $4,235

$4,450 is the level that capped every rebound between 8 and 10 September, and a daily close above it would open $4,510, the 3 September high, and then the 200-day average near $4,541. On the downside, $4,335 is today’s session low and the $4,223–$4,235 area held on both 6 August and 16 September. Momentum is only stabilising: RSI sits just above neutral while MACD is still negative, so rallies remain fragile until $4,450 gives way.

The macro picture has turned slightly in gold’s favour this week. The Fed has delivered its hike, the hard data have started to question how many more it can justify, and oil is easing. The risk is a strong September inflation print that puts the next hike firmly back on the table.

Scenario odds: 40% bullish, 35% neutral, 25% bearish.