(Kitco News) - The gold market is selling off after the latest data showed U.S. consumer sentiment improving beyond expectations this month.
The Consumer Confidence Index rose to 114.8 in January, above economists’ consensus forecast for a 111.3 reading and also above the revised 108.0 print in December, the Conference Board said on Tuesday. The reading was the highest since December 2021, and January marked the index’s third monthly increase in a row.
The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, surged to 161.3 from 147.2 last month, while the Expectations Index, which represents consumers’ short-term outlook for income, business, and labor market conditions, improved to 83.8 in January, up from December’s revised reading of 81.9.
Gold prices plunged to session lows following the consumer sentiment data, with spot gold falling from $2,047.05 in the minutes before the 10 am EST release to just under $2,030 per ounce at the time of writing.
“January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor,” said Dana Peterson, Chief Economist at The Conference Board. “The gain was seen across all age groups, but largest for consumers 55 and over. Likewise, confidence improved for all income groups except the very top; only households earning $125,000+ saw a slight dip.”
Peterson said January’s write-in responses showed that consumers remain concerned about rising prices, though inflation expectations fell to a three-year low.
“Buying plans dipped in January, but consumers continued to rate their income and personal finances favorably currently and over the next six months,” she said. “Consumers’ Perceived Likelihood of a US Recession over the Next 12 Months continued to gradually ease in January, consistent with an Expectations Index rising above 80.”
Assessments of the present situation rose in January, supported by more positive views of business conditions and the employment situation. When asked to assess their current family financial conditions, the proportion reporting ‘good’ increased while those saying ‘bad’ fell. “This suggests consumers are starting off the year in good spirits about their current finances,” Peterson added.
“Consumer expectations for the next six months increased slightly in January, due to receding pessimism around future business conditions, labor market, and income prospects,” she said. “Expectations that interest rates will rise in the year ahead plummeted to just 41.5 percent.”
