U.S. consumer confidence disappoints in September, gold rises
(Kitco News) - Gold prices ticked up after a reading of September’s U.S. consumer confidence index came in below expectations.
American consumer confidence index dropped to a three-month low of 125.1 in September, from August’s downwardly revised reading of 134.2, the U.S. Conference Board reported Tuesday. Economists were expecting to see a decline in the index, with the market consensus projecting a reading of 134.1.
Immediately after the release, December Comex gold was trading at $1,528.10, down 0.22% on the day.
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.
The Present Situation Index, which describes consumers’ views on current business and labor market conditions, decreased to 169.0 from 176.0. Meanwhile, the Expectations Index, which represents consumers’ short-term outlook on income, business, and labor market, declined to 95.8 from 106.4.
The U.S.-China trade war rhetoric has rattled consumers in August, said Lynn Franco, senior director of Economic Indicators at The Conference Board.
“Consumers were less positive in their assessment of current conditions and their expectations regarding the short-term outlook also weakened. The escalation in trade and tariff tensions in late August appears to have rattled consumers … While confidence could continue hovering around current levels for months to come, at some point this continued uncertainty will begin to diminish consumers’ confidence in the expansion,” Franco pointed out.
Looking at the labor market, the report noted that the outlook on jobs was “less upbeat,” as the number of consumers expecting more jobs in the months ahead declined slightly to 17.5 from 19.9.
Market reaction to missed consumer expectations will be limited because the index still remains high when compared to historical standards, said CIBC Capital Markets economist Katherine Judge.
“U.S. consumers lost all of the confidence that they gained in the late summer months in September, with the Conference Board's consumer confidence index falling to a three-month low … Spending intentions for durable goods and homes fell and are below levels seen a year ago … Overall, while the data disappointed, confidence remains high by historical standards which should limit any market reaction,” Judge wrote on Tuesday.