(Kitco News) - The gold market is trading higher ahead of the weekend after the latest data showed consumer sentiment improved, while one-year inflation expectations also ticked higher.
The University of Michigan said Friday that its preliminary Consumer Sentiment survey rose to 74 in December, the highest reading in seven months and up from November’s final reading of 71.8. The data was better than expected, as economists had anticipated a reading of 73.
The gold market is seeing some buying following the 10 am EST data release. Spot gold last traded at $2,637.78 per ounce for a gain of 0.22% on the day, after trading as high as $2,645.73 overnight.
The components of the index were largely positive. “A surge in buying conditions for durables led Current Economic Conditions to soar more than 20%,” said Surveys of Consumers Director Joanne Hsu. “Rather than a sign of strength, this rise in durables was primarily due to a perception that purchasing durables now would enable buyers to avoid future price increases. The expectations index continued the post-election re-calibration that began last month, climbing for Republicans and declining for Democrats in December. Independents were, as usual, in the middle between the two major parties, with readings close to the national average.”
Hsu said the ongoing adjustment process “is consistent with a response to actual underlying changes in expectations for the national economy, and not merely an expression of partisanship.”
“For example, throughout this month’s interviews, Democrats voiced concerns that anticipated policy changes, particularly tariff hikes, would lead to a resurgence in inflation,” she explained. “Republicans disagreed; they expect the next president will usher in an immense slowdown in inflation. As such, national measures of sentiment and expectations continue to reflect the collective economic experiences and observations of the American population as a whole.”
Year-ahead inflation expectations rose from 2.6% in November to 2.9% this month, the highest reading in six months, but still within the 2.3 - 3.0% range seen in the two years before the pandemic. “Long-run inflation expectations edged down from 3.2% last month to 3.1% this month, modestly elevated relative to the range of readings seen in the two years pre-pandemic,” Hsu said.
