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Weaker-than-expected U.S. consumer confidence pushes gold price higher

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(Kitco News) Gold prices edged up after the U.S. consumer confidence index came in short of market expectations in October.

American consumer confidence index declined to 100.9 in October, from September’s downwardly revised reading of 101.30, the U.S. Conference Board reported Tuesday. Economists were expecting to see the index at a reading of 102.0.

Gold prices ticked up towards daily highs after the data release with the December Comex gold futures last trading at $1,909.80 an ounce, up 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, increased to 104.6 from 98.9. At the same time, the Expectations Index, which represents consumers’ short-term outlook on income, business, and labor market, fell to 98.4 from 102.9.

Weaker-than-expected October data follows a significant uptick in September, said Lynn Franco, senior director of Economic Indicators at The Conference Board.

"Consumers’ assessment of current conditions improved while expectations declined, driven primarily by a softening in the short-term outlook for jobs. There is little to suggest that consumers foresee the economy gaining momentum in the final months of 2020, especially with COVID-19 cases on the rise and unemployment still high," Franco noted.

Looking at the labor market, the report noted that the outlook on jobs was mixed. The proportion expecting more jobs in the months ahead increased slightly from 32.9% to 33.2%, while those anticipating fewer jobs also increased from 16.1% to 20.2%.

Even though the October numbers don’t reveal any negative impact from no additional fiscal stimulus just yet, consumer confidence could still suffer in the months ahead, said CIBC World Markets economist Katherine Judge.

"While the rise in new virus cases as well as fiscal support uncertainty hasn't proven to completely derail consumer confidence at this point, without a fiscal package, a challenging fall and winter could see the metric push lower in the months to come," Judge said.

Live 24 hours gold chart [Kitco Inc.]

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