(Kitco News) - Gold continues to hold firm around the $4,000-an-ounce level but remains unable to attract fresh bullish momentum, even as U.S. consumer sentiment deteriorates, heightening concerns that weakening consumption could tip the economy into recession.
The University of Michigan reported on Friday that its preliminary Consumer Sentiment Index for November fell to 50.3, down from 53.6 in October. The decline was larger than expected, as economists had anticipated only a modest pullback to 53.0.
“Consumer sentiment fell back about 6% this November, led by a 17% drop in current personal finances and an 11% decline in year-ahead expected business conditions,” said Joanne Hsu, director of the Surveys of Consumers. “With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy. This month’s decline in sentiment was widespread across age, income, and political affiliation.”
Despite the disappointing data, gold has failed to break through the key psychological resistance at $4,000 per ounce. The precious metal saw limited reaction in the immediate aftermath of the report, with spot gold last trading at $3,993.80 an ounce, up 0.44% on the day.
The report also showed that inflation fears are rising, even though they remain below the highs seen in May. One-year inflation expectations rose to 4.7%, up from 4.6% reported in September.
Meanwhile, long-term inflation expectations dropped to 3.6%, down from September’s reading of 3.9%.
“These expectations are now below the midpoint between the readings seen a year ago and the 2025 peak reading from April,” the report said.
