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Gold prices holding above $1,900 an ounce as UofM consumer sentiment improves and inflation expectations continue to cool

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(Kitco News) - The gold market continue to hold on to gains above $1,900 an ounce even as preliminary data shows U.S. consumer sentiment data rising more than expected.

Friday, the University of Michigan said the preliminary reading of its Consumer Sentiment Index rose to 64.6, up from December’s reading of 59.7. the data beat expectations as consensus forecasts were calling for a reading of around 60.8.

Consumer sentiment has improved at the start of the year; however, the report noted that the index is down nearly 4% from where it was in January 2022.

Although the headline sentiment data was stronger than expected some analysts have said that gold is able to hold its ground as the report showed that consumer inflation expectations continue to fall, even as they remain above the Federal Reserve’s target of 2%.

According to some economists, falling inflation expectations gives the Federal Reserve room to continue to slow its aggressive monetary policy stance, which would be positive for gold. February gold futures is holding near its session highs, last trading at $1,913.50 an ounce, up 0.75% on the day.

The report said that consumers expect inflation to rise 4.0% 12 months from now, down from the previous forecast of 4.4%. Five-year inflation expectations fell to 3.0%, up slightly from December’s estimate of 2.9%.

The report noted that elevated long-term inflation expectations remains a persistent concern for economic growth.

"Uncertainty over both inflation expectations measures remains high, and changes in global factors in the months ahead may generate a reversal in recent improvements," the report said.


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