(Kitco News) - The gold market is not able to attract a safe-haven bid, with prices hovering near session lows even as consumer optimism continues to fade, raising the risk of slower economic activity.
Tuesday, the U.S. Conference Board said its Consumer Confidence Index dropped to 97 in April, down sharply from March’s revised reading of 103.1. The data was weaker than expected, as economists forecasted an increase to 104.
This is the third consecutive month that the sentiment has disappointed.
“Despite these three months of weakness, the gauge continues to move sideways within a relatively narrow range that’s largely held steady for more than two years,” the report said.
The gold market continues to see technical selling pressure as traders focus on rising expectations that the Federal Reserve will maintain its restrictive monetary policy through the summer.
June gold futures last traded at $2,319.70 an ounce, down 1.62% on the day. According to some analysts, gold prices are close to testing a critical support level. Some analysts have said that gold needs to hold above $2,300 as it closes out the month. A drop below would signal more weakness to come.
The report showed a broad-based decline in consumer sentiment. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, dropped to 142.9 last month from a downwardly revised 146.8 in March. Meanwhile, the Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, the Expectations Index fell to 66.4.
The report noted that an Expectations Index reading below 80 often signals a potential recession.
Dana M. Peterson, Chief Economist at The Conference Board, said that optimism has dropped to its lowest level since July 22.
“Despite April’s dip in the overall index, since mid-2022, optimism about the present situation continues to more than offset concerns about the future,” she said. “In the month, confidence declined among consumers of all age groups and almost all income groups except for the $25,000 to $49,999 bracket. Nonetheless, consumers under 35 continued to express greater confidence than those over 35.”
The report noted that rising prices for food and gas continue to dominate consumer concerns.
