(Kitco News) - The gold market is trading slightly higher ahead of the weekend after the latest data showed consumer sentiment in the U.S. holding steady, while near-term inflation expectations rose once again.
The University of Michigan announced on Friday that the preliminary reading of its Consumer Sentiment survey for October was 55. The data was better than expectations, as the consensus forecast of economists called for a reading of 54.2, but it was still slightly lower than September’s final reading of 55.1.
“Consumer sentiment moved sideways this month,” said Surveys of Consumers Director Joanne Hsu. “At 55 index points, sentiment is virtually unchanged from September.”
Gold prices turned positive on the session following the 10 am EDT data release, with spot gold last trading at $3,976.54 per ounce for a gain of 0.01% on the day.
The components of the September index showed a mixed picture of consumer sentiment, with short-term inflation expectations rising and some areas reflecting the ongoing impact of high prices.
“Improvements this month in current personal finances and year-ahead business conditions were offset by declines in expectations for future personal finances as well as current buying conditions for durables,” Hsu said. “Overall, consumers perceive very few changes in the outlook for the economy from last month.”
Year-ahead inflation expectations ticked down from 4.7% last month to “a still-high” 4.6% this month,” the report noted, while long-run inflation expectations held steady at 3.7%. “Inflation expectations for both time horizons are about midway between the readings seen a year ago and the highs seen this year in April and May in the wake of the initial announcements of major tariff changes,” Hsu wrote.
“Pocketbook issues like high prices and weakening job prospects remain at the forefront of consumers’ minds,” she added. “At this time, consumers do not expect meaningful improvement in these factors. Meanwhile, interviews reveal little evidence that the ongoing federal government shutdown has moved consumers’ views of the economy thus far.”
Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, told Kitco News that with the government shutdown, private data like this morning’s consumer confidence numbers are that much more important.
"Fortunately, most of the numbers beat expectations, showing the resilience of the consumer amid all of the tariff and policy uncertainty," he said. "However, in absolute terms, the numbers are still low – only 55, and at the lower end of the range over the life of the survey."
"We believe the seasonal weakness will pass, and once the government re-opens and earnings season kicks off in earnest, we will see a resumption of the rally that we have seen all year," Zaccarelli added. "The death of this bull market has been greatly exaggerated."
