(Kitco News) - The gold market continues to face modest selling pressure even as consumer confidence in the U.S. falls to its lowest level since the start of the year.
The Consumer Confidence Index fell to 89.4 in August, compared to July’s reading of 90.8. The data was also below economists’ consensus forecast for a reading of 90.3.
According to the report, consumer pessimism was driven by future expectations. The Present Situation Index—based on consumers' assessment of current business and labor market conditions—rose by 6.8 points to 121.2, ending three consecutive monthly declines, the report said. The Expectations Index—based on consumers' short-term outlook for income, business, and labor market conditions—dropped by 5.8 points to 68.2.
“Consumer confidence moderated slightly in August for a second consecutive month,” said Dana Peterson, Chief Economist at The Conference Board. “The Expectations Index slipped further into negative territory, which was offset by a moderate rise in the Present Situation Index after declining in the past three months. Consumer appraisals of current business conditions were mildly positive. Perceptions of the current labor market improved, reversing three months of moderate decline. Looking ahead, consumers were more pessimistic about business conditions and the labor market over the next six months. Expectations for household incomes moderated but remained optimistic overall.”
The gold market is not seeing much reaction to the disappointing sentiment data. Spot gold last traded at $4,622.70 an ounce, down 0.62% on the day.
The report said that consumer pessimism continues to be driven by elevated prices in general—and oil and gas prices specifically. Consumers also remain focused on the ongoing war with Iran, food and grocery prices, trade, and jobs.
“On a six-month moving average basis, confidence across all age groups trended down slightly, remaining highest among consumers under 35. By income, confidence was mixed, but generally higher-income groups were more optimistic. By generation, confidence for Gen Z remained the highest, followed closely by Millennials on a six-month moving average basis. The three oldest generations—Generation X, Baby Boomer, and Silent Generation—trailed in confidence by a wider margin,” said Peterson in the report.
Jeffrey Roach, Chief Economist for LPL Financial, said that the growing pessimism could weigh on future growth as consumers end up consuming less.
“Consumers are optimistic about today but increasingly nervous about tomorrow. Assessments of current conditions improved materially, while future expectations fell to their lowest level since January as Middle East tensions and income concerns weighed on sentiment. Although employment conditions remain solid, fading expectations for income growth may act as a headwind to spending. For now, we expect the economy will grow 2.1% in Q3,” he said.
