(Kitco News) - Disappointing consumer confidence is not having much impact the gold market as prices trade near session lows because of technical selling pressure.
American consumer confidence index fell to 98.7 in June, down from May’s revised reading of 103.2, the U.S. Conference Board reported Tuesday. The data was weaker than expected; economists were expecting to see the index at a reading of around 100.
The report said that sentiment is at its lowest level since February 2021.
The disappointing data is having little impact on gold prices. August gold futures last traded at $1,822.150 an ounce, down 0.15% on the day. The gold market has been trading in a fairly narrow range between support at $1,800 and resistance at $1,850 an ounce. Analysts note that the precious metal is caught in a tug of war between rising interest rates and market volatility and growing economic uncertainty.
According to some economists, helping to fuel the rising pessimism are growing concerns that the global economy will fall into a recession. Looking at current expectations, the survey said that The Present Situation Index fell slightly to 147.1, down from May’s reading of 147.4. However, the Expectations Index dropped sharply to 66.4, down from the previous reading of 73.7, its lowest level since March 2013.
Lynn Franco, Senior Director of Economic Indicators at The Conference Board said that weak consumer sentiment is being driven by rising food and energy prices.
“Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices. Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by yearend,” Franco said.
“Purchasing intentions for cars, homes, and major appliances held relatively steady—but intentions have cooled since the start of the year and this trend is likely to continue as the Fed aggressively raises interest rates to tame inflation. Meanwhile, vacation plans softened further as rising prices took their toll,” she added. “Looking ahead over the next six months, consumer spending and economic growth are likely to continue facing strong headwinds from further inflation and rate hikes.”
