(Kitco News) - The gold market is continuing to build on its strong gains ahead of the weekend after the latest data showed consumer sentiment in the U.S. improving, even as longer-term inflation expectations ticked higher once again.
The University of Michigan announced on Friday that the preliminary reading of its Consumer Sentiment survey for February was 57.3. The data was better than expectations, as the consensus forecast of economists called for a reading of 55, and it was also above January’s final reading of 56.4.
“Consumer sentiment was essentially unchanged, inching up less than one index point from last month and sitting about 20% below January 2025,” said Surveys of Consumers Director Joanne Hsu. “Sentiment surged for consumers with the largest stock portfolios, while it stagnated and remained at dismal levels for consumers without stock holdings.”
Gold prices are continuing to set fresh session highs following the 10 am EST data release, with spot gold last trading at $4,955.16 per ounce for a gain of 3.65% on the day.
The February index reflected modest increases in current personal finances and buying conditions for durables, offset by a small decline in long-run business conditions.
“While sentiment is currently the highest since August 2025, recent monthly increases have been small—well under the margin of error—and the overall level of sentiment remains very low from a historical perspective,” Hsu noted. “Concerns about the erosion of personal finances from high prices and elevated risk of job loss continue to be widespread. Interviews for this release cover the two-week period that ended this past Monday.”
And while there was a significant decrease in near-term inflation expectations, longer-term expectations ticked higher once again.
“Year-ahead inflation expectations fell from 4.0% last month to 3.5% this month, the lowest reading since January 2025,” Hsu said. “This month’s reading still exceeds those seen in 2024 and remains well above the 2.3-3.0% range seen in the two years pre-pandemic. Long-run inflation expectations inched up for the second straight month, from 3.3% last month to 3.4% this month. In comparison, readings ranged between 2.8% and 3.2% in 2024, and were below 2.8% throughout 2019 and 2020.”
Jeffrey Roach, Chief Economist for LPL Financial, told Kitco news the main takeaway is that one-year inflation expectations are down to pre-'Liberation Day' levels.
"Inflation expectations have fully recovered from the ‘shock and awe’ from the April 2nd tariff announcements," he said.
Roach noted that a major reason for the improved opinion on household finances is higher assets, a category sensitive to market performance. "Clearly, the wealth effect remains a key factor for consumer spending and consumer expectations," he said. "Home buying conditions are mixed so we shouldn’t expect too much change here until mortgage rates decline. The economy still has an affordability problem which disproportionately hurts middle- and lower-middle class."
"Bottom Line: Consumers have moved on from tariff preoccupations," Roach said. "Higher assets improved the outlook for household finances, i.e., the K-shaped economy continues. More consumers say it’s a good time to buy a vehicle and major household items. Therefore, we expect real growth to approach 2.7% this quarter as conditions remain fertile."
