Gold Prices Continue to Climb – Prices of precious metal are hitting record highs, thanks in part to a drop in consumer optimism.
This week, the U.S. Conference Board reported a significant decline in its Consumer Confidence Index.
Consumer Confidence Drops
On Tuesday, the index fell to 98.7 in September, down from August’s revised reading of 105.6. This data was much weaker than expected. Economists had forecasted a nearly unchanged reading of 103.9.
Gold Reacts to the Data
In response to the disappointing consumer sentiment, gold prices caught a modest bullish bid. December gold futures last traded at $2,661.50 an ounce, reflecting an increase of 0.34% for the day.
Broad-Based Decline in Sentiment
The report indicated that the decline in consumer sentiment was broad-based. It was led by a sharp drop in near-term confidence. The Present Situation Index, which measures consumers’ assessment of current business and labor market conditions, fell by 10.3 points to 124.3. Meanwhile, the Expectations Index, which gauges consumers’ short-term outlook for income and business conditions, declined by 4.6 points to 81.7 but remained above 80.
Gold Prices Continue to Climb – Expert Insights
“Consumer confidence dropped in September to near the bottom of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. She noted that September’s decline was the largest since August 2021, and all five components of the Index showed deterioration.
Assessment of current business conditions turned negative, and views of the labor market softened. Many consumers are now more pessimistic about future labor market conditions and less positive about future business conditions and income.
Gold Prices Continue to Climb – Age-Group Differences
The decline in confidence was steepest for consumers aged 35 to 54. As a result, this age group has become the least confident, based on a six-month moving average. In contrast, consumers under 35 remain the most confident.
In summary, the drop in consumer confidence is influencing gold prices positively, pushing them to new heights. As sentiment continues to shift, it will be interesting to see how these trends evolve in the coming months.
Source KITCO
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