(Kitco News) - The gold market is trading near session highs after the latest data showed consumer sentiment in the U.S. declining dramatically, while one-year inflation expectations shot to their highest level since last year’s tariff shock.
The University of Michigan announced on Friday that the preliminary reading of its Consumer Sentiment survey for April was 47.6. The data was far worse than expectations, as the consensus forecast of economists called for a reading of 52, and it was also below March’s final reading of 53.3.
“Consumer sentiment sank about 11% this month, extending a decline that began with the start of the Iran conflict, and is currently about 9% below a year ago,” said Surveys of Consumers Director Joanne Hsu. “Demographic groups across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall.”
Gold prices continued to trade just off session highs in the wake of the 10 am EST data release, with spot gold last trading at $4,777.68 per ounce for a gain of 0.23% on the day.
The April index reflected a dramatic decline in expected business conditions, while year-ahead inflation expectations rose at their fastest pace since the ‘Liberation Day’ tariff announcement of a year ago.
“One-year expected business conditions plunged about 20% and is now 6% below last April,” Hsu wrote. “Assessments of personal finances declined about 11%, with consumers expressing a substantial increase in concerns over high prices and weaker asset values. Buying conditions for durables and vehicles worsened, again on the basis of high prices.”
“Open ended comments show that many consumers blame the Iran conflict for unfavorable changes to the economy,” she said. “Note that 98% of interviews were completed prior to the April 7th announcement of a temporary cease-fire. Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated.”
“Year-ahead inflation expectations surged from 3.8% in March to 4.8% this month, the largest one-month increase since April 2025,” the report noted. “The current reading 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 ticked up from 3.2% last month to 3.4% this month, the highest reading since November 2025. In 2024, values ranged between 2.8% and 3.2%, while in 2019 and 2020, they were consistently below 2.8%.”
