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Gold steady as U.S. consumer confidence posts slight decline in August

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Gold steady as U.S. consumer confidence posts slight decline in August

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

American consumer confidence index edged down to 135.1 in August, from July’s upwardly revised reading of 135.8, the U.S. Conference Board reported Tuesday. Economists were expecting to see a decline in the index, with market consensus projecting a reading of 129.5.

Immediately after the release, December Comex gold was trading at $1,541.80, up 0.30% on the day.

The Present Situation Index, which describes consumers’ views on current business and labor market conditions, rose to 177.2 from 170.9, marking the highest level in nearly 19 years. Meanwhile, the Expectations Index, which represents consumers’ short-term outlook on income, business, and labor market, declined to 107.0 from 112.4.

“Consumers’ assessment of current conditions improved further … Expectations cooled moderately, but overall remain strong. While other parts of the economy may show some weakening, consumers have remained confident and willing to spend,” said Lynn Franco, senior director of Economic Indicators at The Conference Board.

However, the report warned that if the U.S.-China trade war persists for much longer, consumer confidence will be impacted.

“If the recent escalation in trade and tariff tensions persists, it could potentially dampen consumers’ optimism regarding the short-term economic outlook,” Franco added.

Looking at the labor market, the report noted that the outlooks on jobs was “less positive,” as the number of consumers expecting more jobs in the months ahead declined slightly to 19.7 from 19.9.

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.

After digesting the data, economists said that American consumers are not picking up on Wall Street’s worries just yet.

“The 135.1 level for the Conference Board measure in August was well above market expectations, and included a further climb in readings on ‘current conditions’ … Plans to buy vehicles edged up a bit, while home/appliance purchase plans went the other way,” said CIBC Capital Markets chief economist Avery Shenfeld. “The results are consistent with our view that domestic demand will cushion the U.S. from the downdraft on the trade side, limiting the Fed to one further mid-cycle ease. The upside surprise isn't likely to move markets today.”

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