Gold price remains under strong selling pressure below $1,700 following rise in U.S. consumer confidence
(Kitco News) - Gold prices remain under significant pressure, below $1,700 an ounce as American consumers feel a little bit more optimistic regarding the health of the economy.
Tuesday, the U.S. Conference Board said that its Consumer Confidence Index for March rose to a reading of 109.7, up from February’s revised reading of 90.4. The data beat expectations as economists were expecting a reading around 96.9.
“Consumers’ assessment of current conditions and their short-term outlook improved significantly, an indication that economic growth is likely to strengthen further in the coming months. Consumers’ renewed optimism boosted their purchasing intentions for homes, autos and several big-ticket items,” said Lynn Franco, senior director of economic indicators at The Conference Board. “However, concerns of inflation in the short-term rose, most likely due to rising prices at the pump, and may temper spending intentions in the months ahead.”
The gold market has been struggling to attract bullish momentum as investors continue to price in robust economic recovery from the devastating impact of the COVID-19 pandemic. The growing optimism can also be seen in 10-year bond yields, which has risen to a new 13-month high of 1.77%.
June gold futures last traded at $1,685.70 an ounce, down 1.69% on the day.
Consumer optimism has reached its highest level since the start of the global pandemic one year ago. However, while the data was significantly better-than-expected economists not that just before the pandemic confidence index was at 132.
“[There is] still a long way to go,” said Adam Button, head currency strategy at Forexlive.com.
Katherine Judge, senior economist at CIBC, said that the rise in consumer confidence coincided with continued re-openings, vaccinations, and fresh fiscal stimulus.
"While in the near term, there's still some risk that some states may have to tighten social distancing temporarily, looking further out, fiscal stimulus will provide a catalyst for a surge in spending thereafter as re-openings resume," she said.
Looking at the components of the report, there were broad-based gains in sentiment. The Present Situation Index climbed to a reading of 110.0, from February’s reading at 89.6, the report said. Meanwhile, The Expectations Index also improved, rising to a reading of 109.6, compared to the previous level at 90.9.