(Kitco News)— The gold market is seeing some renewed selling pressure as consumer optimism remains relatively resilient despite the persistent threat of a recession.
On Tuesday, the U.S. Conference Board said its Consumer Confidence Index fell to 100.4 in June, down from May’s revised reading of 101.3. Despite the drop, the data was slightly stronger than expected, as economists forecasted a drop to 100.
The gold market has dropped to session lows in initial reaction to the latest economic data. However, the price action remains well within the current trading range. August gold futures last traded at $2,334.90 an ounce, down 0.43% on the day.
According to the report, near-term consumer expectations continue to support sentiment; however, expectations remain a drag. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased to 141.5 compared to 140.8 last month.
At the same time, the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 73.0 in June, down from 74.9 in May.
“The Expectations Index has been below 80 (the threshold which usually signals a recession ahead) for five consecutive months,” the report said.
Dana M. Peterson, Chief Economist at The Conference Board, said that the health of the labor market remains a critical factor in consumer sentiment.
“Confidence pulled back in June but remained within the same narrow range that’s held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future. However, if material weaknesses in the labor market appear, Confidence could weaken as the year progresses,” she said.
Although 12-month inflation expectations remain elevated, they have dropped. Consumers see inflation rising 5.3% next year, down from 5.4% in May.
“June’s write-in responses revealed that elevated prices, especially for food and groceries, continued to impact consumers’ views of the economy, followed by the labor market and US political situation,” the report said.
