Gold prices holding key support above $1,650 following weaker-than-expected consumer consumer data
(Kitco News) - Gold price are down but seeing little reaction to slightly weaker-than-expected U.S. consumer confidence; gold prices continue to hold critical support around $1,650 an ounce.
American consumer confidence index dropped to a reading of 130.7 in February, relatively unchanged from January’s reading of 130.40, the U.S. Conference Board reported Tuesday. However, Economists were expecting to see the index rise, with the market consensus projecting a reading of 132.60.
The gold market has seen consistent technical selling through the morning session following Monday’s massive rally that pushed prices to a fresh seven-year high. Despite the selling pressure gold is seeing little reaction to the economic data. April gold futures last traded at $1,652.10 an ounce, down 1.46% on the day.
The weaker-than-expected headline numbers was the result of a drop in consumers’ confidence in the short-term. The present situation index dropped to 165.1, down from the previous reading of 173.9. Meanwhile the expectations index rose to 107.8, up from January’s reading of 101.4.
Although consumer confidence was relatively unchanged in February, economists expect that consumer spending will continue to support U.S. economic growth.
“Despite the decline in the Present Situation Index, consumers continue to view current conditions quite favorably. Consumers’ short-term expectations improved, and when coupled with solid employment growth, should be enough to continue to support spending and economic growth in the near term,” said Lynn Franco, senior director of Economic Indicators at the Conference Board.
Avery Shenfeld, senior economist at CIBC said that markets could look past the latest sentiment data as the survey was conducted before markets were significantly hit with growing fear sentiment. However, he added that the latest news about the coronavirus should still have limited impact on U.S. confidence.
“For everything other than travel plans, we don't expect to see any impact on US consumers unless and until we see the contagion cropping up in larger numbers on American shores,” he said.