(Kitco News) - The gold market is trading at session lows after the latest data showed consumer sentiment in the U.S. declining, with both shorter and longer-term inflation expectations rising above last month’s one-year highs.
The University of Michigan announced on Friday that the final reading of its Consumer Sentiment survey for May was 44.8. The data was worse than expectations, as the consensus forecast of economists called for a reading of 48.2, the same as the preliminary reading, and it was also below April’s final reading of 49.8.
“Consumer sentiment fell for the third straight month as supply disruptions in the Strait of Hormuz continue to boost gasoline prices,” said Surveys of Consumers Director Joanne Hsu. “Sentiment is now just below the previous historical trough seen in June 2022. The cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month.”
“Lower-income consumers and those without college degrees posted particularly strong sentiment declines; these groups are more sensitive to increases in the cost of gas and other essentials,” she noted. “Independents and Republicans saw decreases in sentiment, with both groups reaching their lowest readings of the current presidential administration. Meanwhile, sentiment of Democrats was little changed from last month. Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run.”
Spot gold fell to a fresh session low and was testing the $4,500 per ounce level after the 10 am ET data release, with spot gold last trading at $4,506.05 per ounce for a loss of 0.82% on the day.
The May index showed a rise in year-ahead inflation expectations, which had risen at their fastest pace since the ‘Liberation Day’ tariff announcement of a year ago in April, while longer-run inflation expectations also spiked higher.
“Year-ahead inflation expectations inched up from 4.7% last month to 4.8% this month,” Hsu wrote. “The current reading substantially exceeds the 3.4% reading seen in February 2026 prior to the start of the Iran conflict, along with all 2024 readings. Long-run inflation expectations climbed from 3.5% in April to 3.9% in May, notably higher than the 2.8% to 3.2% range seen in 2024.”
“This month’s increase in long-run expectations reflects sizable jumps among independents and Republicans,” she added. “For the latter group, long-run inflation expectations are currently more than double their February 2025 reading on a monthly basis.”
