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Gold Near One-Month High As U.S. Consumer Confidence Falls In December

Kitco News

Confidence Index

(Kitco News) - Gold prices were largely unchanged after a weaker-than-expected reading of December’s U.S. consumer confidence index.

American consumer confidence index fell to 122.1 in December, from November’s downwardly revised reading of 128.6, the U.S. Conference Board reported Wednesday. Economists were expecting to see a decline in the index, with market consensus projecting a reading of 128.

Immediately after the release, February Comex gold was seen at $1,289.70, up 0.17% on the day and trading near one-month high.

“It’s been a quiet trading and news week, so far, as many traders and investors are out this week for the holiday season. This is allowing technical considerations to have more daily influence on gold and silver prices, amid the lack of fresh fundamental news,” said Kitco’s senior technical analyst, Jim Wyckoff, in his AM Roundup.

The consumer confidence index retreated from a 17-year high reached in November as jobs outlook changed in December, according to the report.

The Present Situation Index rose to 156.6 from 154.9, while the Expectations Index declined to 99.1 from 111.0.

“The decline in confidence was fueled by a somewhat less optimistic outlook for business and job prospects in the coming months. Consumers’ assessment of current conditions, however, improved moderately. Despite the decline in confidence, consumers’ expectations remain at historically strong levels, suggesting economic growth will continue well into 2018,” said Lynn Franco, director of Economic Indicators at The Conference Board.

Looking at the labor market, the report noted that those stating jobs are “plentiful” dropped to 35.7% from 37.5%, while the number of consumers stating that jobs are “hard to get” fell to 15.2% from 16.8%, marking a 16-year low.

Traders closely watch the consumer optimism survey as it is a potential leading indicator for economic growth. The more optimistic consumers feel, the more likely they are going to spend money and vice versa.

Economists were quite satisfied with the December data, despite the decline in the headline number.

“The details were pretty solid, with the labor differential (between "plentiful" and "hard to get") broadly unchanged and still tilted well in the favor of jobs being plentiful,” said Andrew Grantham, a senior economist at CIBC Capital Markets. “And even though the headline index was below the consensus forecast, it's still high by historical standards and also in-line with the average for 2017 as a whole. As a result, market reaction to today's release should be limited.”

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