(Kitco News) - The gold market remains under pressure and below $1,850 an ounce. Still, the precious metal is seeing little reaction from stronger-than-expected U.S. consumer confidence.
American consumer confidence index fell to 106.4, down from April's revised reading of 108.6, the U.S. Conference Board reported Tuesday. Economists expected to see a sharper drop in the index to a reading of around 103.9.
The gold market is not seeing much reaction to the latest economic data; the yellow metal is seeing some renewed selling pressure as the U.S. dollar attracts some new buying interest. August gold futures last traded at $1,847.70, down roughly 0.5% on the day.
The report noted that consumers' views on current economic conditions and future expectations dropped in May. The Present Situation Index fell to 149.6, down from April's reading of 152.9; at the same time, the Expectations Index dropped to 77.5, down from the previous level of 79.0.
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"The decline in the Present Situation Index was driven solely by a perceived softening in labor market conditions. By contrast, views of current business conditions—which tend to move ahead of trends in jobs—improved. Overall, the Present Situation Index remains at strong levels, suggesting growth did not contract further in Q2," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. "That said, with the Expectations Index weakening further, consumers also do not foresee the economy picking up steam in the months ahead. They do expect labor market conditions to remain relatively strong, which should continue to support confidence in the short run."
The report also noted that inflation holding near its highest levels in 40 years remains a critical issue for consumers and is impacting consumption.
"Purchasing intentions for cars, homes, major appliances, and more all cooled—likely a reflection of rising interest rates and consumers pivoting from big-ticket items to spending on services. Vacation plans have also softened due to rising prices,' said Franco. "Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year."
