Gold price hits fresh daily lows as UofM consumer sentiment ticks up to 59.8

(Kitco News) The gold market hit fresh daily lows after Michigan Consumer Sentiment ticked up in October.

The University of Michigan said that a preliminary estimate of its consumer sentiment survey edged up to a reading of 59.8 from September’s reading of 58.6. The data beat market consensus calls that expected a print of 59.0.

“Consumer sentiment is essentially unchanged at 1.2 index points above September, in spite of a 23% improvement in current buying conditions for durables owing to an easing in supply constraints. Sentiment is now 9.8 points above the all-time low reached in June, but this improvement remains tentative, as the expectations index declined by 3% from last month,” the survey said.

The consumer sentiment report also revealed that inflation expectations are still rising across age, income, and education groups. The year-ahead inflation rate climbed to 5.1% after coming in at 4.7% the previous month, the survey pointed out.

Five-year inflation expectations also edged up to 2.9% in October from 2.7% registered in September.

“After 3 months of expecting minimal increases in gas prices in the year ahead, both short and longer run expectations rebounded in October,” the report noted.

The gold market ticked down and hit fresh daily highs in response to the sentiment data. December Comex gold futures last traded at $1,655.60 an ounce, down 1.28% on the day.

The improvement in the headline index was mainly because of the current conditions index, which advanced from 59.7% to 65.3%, said Capital Economics chief North America economist Paul Ashworth. And that means that the improvement could be temporary, with November conditions deteriorating quickly.

“The forward-looking expectations index dropped … consumer confidence remains unusually low – on a par with the lowest points during the financial crisis in 2008 and well below the levels during the early stages of the pandemic. Although not a great guide to actual spending in recent years, the lack of confidence is consistent with outright declines in real consumption. Furthermore, with gasoline prices rising again now and stock markets hitting new lows, confidence could deteriorate even more in November,” said Ashworth.