Gold prices holding initial support as U.S. consumer confidence falls to 104.1
NEW YORK (January 28) Renewed buying momentum has pushed gold prices back above $2,750 an ounce and according to some analysts, the precious metal could attract some safe-haven attention as consumer confidence falls more than expected.
The Consumer Confidence Index dropped to 104.1, down from December’s revised reading of 109.5, the Conference Board said Monday.
The data were weaker than expected, as economists had been looking for a less dramatic drop in optimism.
The gold market is not seeing a significant reaction to the latest economic data but it continues to hold critical support levels. Spot gold last traded at $2,752.20 an ounce, up 0.42% on the day.
Analysts have noted that the weak optimism could impact consumption in the early part of the new year. Consumption increases when consumers feel confident about the economy.
“The University of Michigan survey last week was surprisingly soft so eyes are fixed on the upcoming data on consumers and retail sales,” said Adam Button, Head of Currency Strategy at Forexlive.com “It doesn't look like we're getting some kind of breakout in this survey as it's reeled back in after the election.”
The report noted a decline in both current and future expectations. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 1.2 points to 140.2. At the same time, the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—tumbled 12.6 points to 81.1. The report noted that the 80-point level in the Expectations Index is the signal threshold of a potential recession.
“The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board in the report. “While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop. Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened. Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”
Consumer expectations on inflation have stabilized but remain elevated.
“Average 12-month inflation expectations stabilized at 5.0% in December, the lowest since March 2020. Additionally, references to inflation and prices dominated write-in responses. Asked what goods and services they expect to be more affordable in 2025, consumers mostly selected food and gas,” the report said.
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