(Kitco News) - The gold market is holding on to solid gains ahead of the weekend but is not seeing any significant reaction as U.S. consumer sentiment continues to drop and inflation expectations remain elevated.
Friday, the University of Michigan said the preliminary reading of its Consumer Sentiment Index fell to 65.6 compared to May’s revised reading of 69.1. The data was weaker than expected, as consensus forecasts called for a reading of around 72.1.
The gold market continues to see stick resistance at $2,350 an ounce in its initial reaction to the latest sentiment numbers. August gold futures last traded at $2,347 an ounce, up more than 1.25% on the day.
Although the data was weaker than expected, Surveys of Consumers Director Joanne Hsu dismissed the decline saying sentiment is little changed from May.
“this month’s reading was a statistically insignificant 3.5 index points below May and within the margin of error. Sentiment is currently about 31% above the trough seen in June 2022 amid the escalation in inflation,” she said. “Overall, consumers perceive few changes in the economy from May.”
Although one-year inflation expectations were unchanged at 3.3%, the report noted broad-based expectations for inflation to remain stubbornly elevated for the foreseeable future.
Hsu noted that the one-year inflation expectations remain above the two-year range seen before the pandemic.
“Long-run inflation expectations have been remarkably stable over the last three years but remain elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic,” she said.
