(Kitco News) - The gold market is trading near session highs after the latest data showed consumer sentiment in the U.S. improving, with shorter-term inflation expectations easing.
The University of Michigan announced on Friday that the preliminary reading of its Consumer Sentiment survey for July was 54.4. The data was better than expectations, as the consensus forecast of economists called for a reading of 51. It was also better than June’s final reading of 49.5, and well above May’’s final reading of 44.8.
“With the second straight month of 10% jumps, consumer sentiment climbed to its highest reading since February of this year on the basis of easing price pressures at the pump in recent weeks,” said Surveys of Consumers Director Joanne Hsu. “All five index components improved, led by significant 20% increases in buying conditions for durables as well as year-ahead business conditions. This month’s rise in sentiment was pervasive across the population, seen across groups by age, income, wealth, and political party. Particularly strong increases were seen among consumers without a bachelor’s degree. However, with prices remaining frustratingly high, consumers are hardly ebullient about the economy; sentiment is down 12% from a year ago. Thus, sentiment’s upward momentum may prove difficult to sustain if recent declines in gas prices continue to reverse course.”
“Interviews for this release spanned June 23 to July 13, with more than 70% completed before the resumption of US strikes against Iran on July 7 and the subsequent increase in gas prices,” she noted.
Spot gold was approaching its session high as it attempted to reclaim the $4,000 per ounce level after the 10 am ET data release, and last traded at $3,998.51 per ounce for a gain of 0.55% on the day.
The July index showed a drop in year-ahead inflation expectations, but longer-run expectations held steady, and both remained high by historical standards.
“Year-ahead inflation expectations ticked down from 4.6% in June to a still-elevated 4.2% this month,” Hsu wrote. “The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations held steady from last month at 3.3%, remaining a bit higher than the 2.8% to 3.2% range seen in 2024.”
