(Kitco News) - The gold market is holding gains above $2,600 an ounce as U.S. consumer optimism improves and inflation fears abate, according to the latest data from the University of Michigan.
On Friday, in its preliminary report, the UofM said that its Consumer Confidence survey rose to 69, up from August’s reading of 67.9. The data was stronger than expected, as economists were anticipating a more modest rise to 68.3.
“Consumer sentiment rose to its highest reading since May 2024, increasing for the second consecutive month and lifting by about 2% above August. The gain was led by an improvement in buying conditions for durables, driven by more favorable prices as perceived by consumers,” said Joanne Hsu, UofM Director of the Survey of Consumers.
The gold market is not seeing any new bullish momentum in reaction to the latest economic data; however, prices remain elevated near their recent record levels. December gold futures last traded at $2,606 an ounce, up nearly 1% on the day.
Along with improved optimism regarding the economy, consumers are also feeling confident that inflation is under control. According to the report, consumers expect inflation to rise by 2.7% in the next 12 months, down from August’s forecast of 2.8%.
“The current reading is the lowest since December 2020 and is well within the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations were little changed, edging up from 3.0% last month to 3.1% this month. Long-run inflation expectations remain modestly elevated relative to the range of readings seen in the two years pre-pandemic,” said Hsu.
According to some analysts, the report continues to solidify expectations that the Federal Reserve will cut interest rates by 25 basis points next week. Although the Fed doesn’t have to act aggressively, analysts expect steady easing to support the slowing economy.
