(Kitco News) - The gold market is setting new all-time highs ahead of the weekend after the latest data showed consumer sentiment in the U.S. deteriorating beyond all expectations, 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 67.8 in February, down from January’s final reading of 71. The data was slightly below expectations, as the consensus forecast of economists called for an unchanged 71.1 reading.
“Consumer sentiment fell for the second straight month, dropping about 5% to reach its lowest reading since July 2024,” said Surveys of Consumers Director Joanne Hsu. “The decrease was pervasive, with Republicans, Independents, and Democrats all posting sentiment declines from January, along with consumers across age and wealth groups.”
“Furthermore, all five index components deteriorated this month, led by a 12% slide in buying conditions for durables, in part due to a perception that it may be too late to avoid the negative impact of tariff policy,” she added. “Expectations for personal finances sank about 6% from last month, again seen across all political affiliations, reaching its lowest value since October 2023. Many consumers appear worried that high inflation will return within the next year.”
The gold market is setting fresh highs following the 10 am EST data release, with spot gold hitting $2,882.88, and last trading at $2,880.85 per ounce for a gain of 0.87% on the day.
The components of the index showed very acute concern about the potential for higher inflation in the coming years.
“Year-ahead inflation expectations jumped up from 3.3% last month to 4.3% this month, the highest reading since November 2023 and marking two consecutive months of unusually large increases,” Hsu said in the report. “This is only the fifth time in 14 years we have seen such a large one-month rise (one percentage point or more) in year-ahead inflation expectations. The current reading is now well above the 2.3-3.0% range seen in the two years prior to the pandemic.”
“Long-run inflation expectations ticked up from 3.2% last month to 3.3% this month,” Hsu added. “Long-run inflation expectations remain elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic.”
