Gold price edges down as UofM consumer sentiment ticks up to 55.1

(Kitco News) The gold market is attempting to hold its early-morning gains as consumer sentiment ticks up in August. The second consecutive monthly improvement comes after the index hit an all-time low in June.

The University of Michigan said a preliminary estimate of its consumer sentiment survey edged up to 55.1 from July’s reading of 51.5. The data beat market consensus calls that were expecting a print of 52.5.

“All components of the expectations index improved this month, particularly among low and middle income consumers for whom inflation is particularly salient,” the survey said.

The consumer sentiment report also revealed that inflation expectations are declining due to falling energy prices. The survey pointed out that the year-ahead inflation rate dropped to 5.0%, which is its lowest reading since February but still well above the 4.6% print from a year ago.

At the same time, the five-year inflation expectations increased to 3% from 2.9% in July.

“Uncertainty over long run inflation receded a bit … Still, the share of consumers blaming inflation for eroding their living standards remained near 48%,” the survey added.

Gold ticked down in response to the sentiment data. December gold futures last traded at $1,808.20 an ounce, up 0.06% on the day after hitting a daily high of $1,814.50 an ounce.

Analysts see the significant drop in gasoline prices as driving the rebound in consumer sentiment.

“As those disinflationary pressures broaden over the coming months, we expect consumer confidence to continue rebounding and inflation expectations to trend lower,” said Capital Economics senior U.S. economist Michael Pearce. “At that level, the expectations index is still consistent with outright declines in real consumption, but with retail gasoline prices set to fall further in the coming weeks, the rebound in sentiment has further to run.”