Gold prices down but seeing little reaction to stronger-than-expected U.S. consumer confidence
(Kitco News) - Gold prices are under pressure but seeing little reaction to stronger than expected U.S. consumer optimism.
Tuesday, the U.S. Conference Board, said that its Consumer Confidence Index fell to a reading of 120 in March, down from February’s reading of 130.7; however, the drop beat expectations as economists expected a fall to 115.10.
Although the headline data was better than expected, sentiment fell to its lowest level in three years.
“Consumer confidence declined sharply in March due to a deterioration in the short-term outlook,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.
Although gold prices are down, the precious metal saw little reaction to the latest economic data. June gold futures last traded at $1,625 an ounce, down more than 1% on the day.
Although the data came in better than expected, economists are expecting consumer confidence to continue to fall as the coronavirus continues to impact the economy.
“March’s decline in confidence is more in line with a severe contraction – rather than a temporary shock – and further declines are sure to follow,” said Franco.
Looking at some of the components of the report, The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased to 167.7 from February’s reading of 169.3. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – dropped to 88.2, down from the previous reading of 108.1.
Andrew Grantham, senior economist at CIBC, said that although the data was better than expected, the relative optimism won’t translate into positive economic activity.
“Whatever way you slice it though, the fact that consumer confidence held up better than expected in March isn't going to change the fact that that month will be a bad one for retail sales and general consumer spending,” he said.