(Kitco News) - Gold prices are holding support above $2,600 an ounce but are not seeing any solid bullish momentum as U.S. consumer confidence weakens more than expected.
The Consumer Confidence Index dropped to 104.7, down from November’s revised reading of 112.8, the Conference Board said Monday.
The data were weaker than expected, as economists had been looking for a relatively unchanged reading.
“The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” said Dana Peterson, Chief Economist at The Conference Board.
Despite the disappointing data, gold is struggling as it faces renewed selling pressure in thin holiday trading. Spot gold last traded at $2,614.50 an ounce, down 0.30% on the day.
Some economists note that the data are even more disappointing as it comes during the all-important holiday shopping season. Traditionally, consumers spend more when they feel optimistic about the health of the economy.
According to the report, the headline index was impacted by a significant drop in future sentiment.
The report said the Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose to 145.2, up from November’s reading of 140.9. At the same time, the Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, dropped to 81.1, down from the previous reading of 92.3.
“While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop. Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened,” said Peterson in the report. “Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”
The report also showed that consumers remain worried about inflation as 12-month inflation expectations increased to 5.0%, up from 4.9% reported in November.
