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Gold price fights for $1,800 as U.S. consumer confidence disappoints in November

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(Kitco News) Gold prices are trading near new daily lows as the U.S. consumer confidence index came short of market expectations in November.

American consumer confidence index declined to 96.1 in November, from October’s upwardly revised reading of 101.4, the U.S. Conference Board reported Tuesday. Economists were expecting to see the index at a reading of 98.0.

Gold prices fell to new daily lows after the data release with the December Comex gold futures fighting to hold the $1,800 an ounce level, last trading at $1,801.00, down 2% on the day. Gold was also reacting to a surge in risk-on sentiment in the market as U.S. stocks continued to rally for a second day.

The Present Situation Index, which describes consumers’ views on current business and labor market conditions, decreased to 105.9 from 106.2. At the same time, the Expectations Index, which represents consumers’ short-term outlook on income, business, and labor market, fell to 89.5 from 98.2.

American consumers are noticing slower economic growth in Q4, said Lynn Franco, senior director of Economic Indicators at The Conference Board.

“Consumers’ assessment of present-day conditions held steady, though consumers noted a moderation in business conditions, suggesting growth has slowed in Q4. Heading into 2021, consumers do not foresee the economy, nor the labor market, gaining strength. In addition, the resurgence of COVID-19 is further increasing uncertainty and exacerbating concerns about the outlook,” said Franco.

Looking at the labor market, the report noted that the outlook on jobs was unchanged. The proportion expecting more jobs in the months ahead declined to 25.9% from 32%, while those anticipating fewer jobs increased to 20.5% from 19.8%.

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.

Looking ahead, economists project that consumer confidence could continue to disappoint.

“The drop was worse than expected and leaves the index within the range it has been in over the last few months, still well below pre-pandemic levels,” said CIBC Capital Markets economist Katherine Judge. “Given the surge in virus cases, it's likely that consumer sentiment could slide in the months ahead.”

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