(Kitco News) - The gold market is holding its ground and session gains even as U.S. consumer sentiment rises significantly more than expected in September.
American consumer confidence index rose to 108, up from August's reading of 103.2, the U.S. Conference Board reported Tuesday. Economists were expecting to see the index at 104.
While off its highs, the gold market is relatively steady as it continues to see a technical bounce after hitting a fresh two-year low overnight. December gold futures last traded at $1,642.60 an ounce, up 0.56% on the day.
Some analysts have said that the strong positive sentiment could potentially weigh on gold as the data continues to support the Federal Reserve's aggressive monetary policy stance. The report shows that U.S. consumers remain indifferent to the growing threat of a recession. Economists note that consumer optimism will continue to support consumption and economic growth.
Looking at the components, the report said that the Present Situation Index rose to 149.60, up from August's reading of 145.3. At the same time, the Expectations Index rose to 80.3, up from the previous reading at 75.8.
"Consumer confidence improved in September for the second consecutive month, supported in particular by jobs, wages, and declining gas prices," said Lynn Franco, senior director of Economic Indicators at The Conference Board. "The Present Situation Index rose again, after declining from April through July. The Expectations Index also improved from summer lows, but recession risks nonetheless persist. Concerns about inflation dissipated further in September—prompted largely by declining prices at the gas pump—and are now at their lowest level since the start of the year."
However, Franco noted that rising interest rates are taking their toll on consumer spending.
"Purchasing intentions were mixed, with intentions to buy automobiles and big-ticket appliances up, while home purchasing intentions fell. The latter no doubt reflects rising mortgage rates and a cooling housing market," Franco said. "Looking ahead, the improvement in confidence may bode well for consumer spending in the final months of 2022, but inflation and interest-rate hikes remain strong headwinds to growth in the short term."
