(Kitco News) - The gold market is trading near session highs ahead of the weekend after the latest data showed consumer sentiment in the U.S. pulling back from its highest level in over half a year, while short and long term inflation expectations rose dramatically.
The University of Michigan announced on Friday that the preliminary reading of its Consumer Sentiment survey was 73.2 in January, down from December’s final reading of 74, which was the highest reading in seven months. The data was slightly below expectations, as the consensus forecast of economists called for a 73.8 reading.
“Consumer sentiment was essentially unchanged in January, inching down less than one index point from December, well within the margin of error,” said Surveys of Consumers Director Joanne Hsu. “Assessments of personal finances improved about 5%, while the economic outlook fell back 7% for the short run and 5% for the long run.”
The gold market is trading back near session highs following the 10 am EST data release, with spot gold last trading at $2,691.09 per ounce for a gain of 0.78% on the day after bottoming at $2,664.07 following nonfarm payrolls and topping out at $2,693.39 shortly after the North American market open.
The components of the index showed growing concern about the potential for higher inflation in the coming years.
“Year-ahead inflation expectations soared from 2.8% last month to 3.3% this month,” Hsu said in the report. “The current reading is the highest since May 2024 and is above the 2.3-3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations rose from 3.0% last month to 3.3% this month. This is only the third time in the last four years that long-run expectations have exhibited such a large one-month change.”
Both short- and long-run inflation expectations rose across multiple demographics, and the increase was particularly strong among lower-income consumers and self-identified Independents.
“January’s divergence in views of the present and the future reflects easing concerns over the current cost of living this month, but surging worries over the future path of inflation,” she noted. “Overall, this month’s deterioration in the expectations index was seen across political affiliations, including declines of about 3% for Independents and 1.5% for Republicans.”
