(Kitco News) - The gold market continues to struggle to find its footing as markets continue to expect interest rates to remain unchanged for the foreseeable future and could face further selling pressure as consumer sentiment continues to improve.
The Consumer Confidence Index ticked up to 92.8 in April, above economists’ consensus forecast for a drop to 89 and also up from the downwardly revised 91.2 print from February, the Conference Board announced on Tuesday.
"Consumer confidence edged up in April but was overall little changed, despite material concern about rising gasoline prices as the war in the Middle East prompted a surge in Brent crude oil prices," said Dana M. Peterson, Chief Economist at The Conference Board. "Consumer appraisals of current and expected business conditions declined moderately compared to last month. This was offset by modest improvements in consumers' perceptions of the labor market, both current and expected, as well as income expectations, which were slightly more optimistic in April."
Gold has seen solid selling pressure through the early North American trading session and remains near session lows in the initial reaction to the better-than-expected consumer sentiment data. Spot gold last traded at $4,571.50 an ounce, down more than 2% on the day.
The components of the report showed that consumer expectations were the biggest factor behind April’s increase.
The report said that its Present Situation Index—based on consumers' assessment of current business and labor market conditions—fell by 0.3 points to 123.8. At the same time, the Expectations Index—based on consumers' short-term outlook for income, business, and labor market conditions—rose by 1.2 points to 72.2.
Looking at demographic groups, the report said that confidence continued to trend downward on a six-month moving average basis for consumers aged 35 and up, while younger consumers were a tad more confident in April. Respondents under 35 remained the most optimistic, and those 55 and over the least.
The report said that while the current ceasefire in the Middle East helped to ease some economic fears, consumers remain cautious.
“Consumers' average and median 12-month inflation expectations ticked downward but continued to be elevated. The percentage of consumers saying interest rates over the next 12 months will be higher on net rose to nearly 50%,” the report said.
