(Kitco News) - The gold market pulled back from $2,500 per ounce after the release of slightly stronger than expected consumer sentiment data that also provided a glimpse into U.S. political sentiment.
On Friday, the University of Michigan said the preliminary reading of its Consumer Sentiment Index rose to 67.8, slightly above July’s reading of 66.4. The data was also above expectations, as the consensus from economists was for a reading of 66.9.
"Consumer sentiment was essentially unchanged for the fourth consecutive month, inching up 1.4 index points,” said Surveys of Consumers Director Joanne Hsu. “With election developments dominating headlines this month, sentiment for Democrats climbed 6% in the wake of Harris replacing Biden as the Democratic nominee for president. For Republicans, sentiment moved in the opposite direction, falling 5% this month.” The sentiment of Independents also rose 3%.
“The survey shows that 41% of consumers believe that Harris is the better candidate for the economy, while 38% chose Trump,” Hsu wrote. “In comparison, between May and July, Trump had a 5 point advantage over Biden on the economy.”
Current Economic Conditions declined to 60.9 in August, down 2.9% from July’s 62.7 level, while the Index of Consumer Expectations improved to 72.1, a 4.8% increase from last month’s 68.8 print.
“Overall, expectations strengthened for both personal finances and the five-year economic outlook, which reached its highest reading in four months, consistent with the fact that election developments can influence future expectations but are unlikely to alter current assessments,” she said. “Survey responses generally incorporate who, at the moment, consumers expect the next president will be. Some consumers note that if their election expectations do not come to pass, their expected trajectory of the economy would be entirely different. Hence, consumer expectations are subject to change as the presidential campaign comes into greater focus, even as consumers expect that inflation - still their top concern - will continue stabilizing.”
Inflation expectations for the year ahead came in at 2.9% for the second straight month, the report noted.
“These expectations ranged between 2.3 to 3.0% in the two years prior to the pandemic,” Hsu said. “Long-run inflation expectations came in at 3.0%, unchanged from that last five months. These expectations remain somewhat elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic.”
Spot gold pulled back from its session high of $2,500.31 per ounce in the minutes following the 10 am EDT release, last trading at $2,486.40 for a gain of 1.22% on the session.
