(Kitco News) - Gold prices are trading up from session lows after the latest data showed a worsening picture for U.S. consumer sentiment this month.
The Consumer Confidence Index rose to 90.8 in July, below economists’ consensus forecast for a 92.3 reading and below the upwardly revised 92.2 print from June, the Conference Board announced on Tuesday.
The Present Situation Index—based on consumers' assessment of current business and labor market conditions—fell by 3.6 points to 114.9, its third consecutive monthly decline,” the report noted. The Expectations Index—based on consumers' short-term outlook for income, business, and labor market conditions—was unchanged at 74.7. The survey period was July 1–22, encompassing ongoing conflict in the Middle East.
Gold prices were coming off session lows in the wake of the 10 am ET data release, with spot gold last trading at $4,029.86 per ounce at the time of writing for a loss of 1.14% on the daily chart.
“Consumer confidence moderated slightly in July, continuing a general downward sloping trajectory since late 2021," said Dana Peterson, Chief Economist at The Conference Board. “The Present Situation Index was less positive for a third consecutive month while the Expectations Index remained in negative territory. Consumer appraisals of current business conditions and, to a lesser extent, perceptions of the current labor market both softened. Looking ahead, consumers anticipate little improvement in business conditions over the next six months, but expectations for the labor market were slightly less negative. Expectations for household incomes moderated but remained optimistic overall.”
The Present Situation Index declined in July. “Net views of current business conditions—the share saying conditions are "good" versus "bad"—fell by 2.6 ppt to +1.1%, barely holding onto positive territory,” the report stated. “Perceptions of current employment conditions also declined, with the labor market differential—the share of consumers saying jobs are "plentiful" minus the share saying jobs are "hard to get"—dipping by 0.7 ppts to +3.1%. This downshift was driven by fewer consumers reporting that jobs are "plentiful", while those saying jobs are "hard to get" dipped slightly over the month.”
Meanwhile, the Expectations Index remained unchanged in July, with two of its three components declined. “Net expectations for business conditions [fell] by 1.5 ppts to –3.3%,” the report noted. “Net expectations for household income also softened, by a milder 0.5 ppts, to +7.3%. Net expectations for labor market conditions improved by 1.3 ppts but remained in negative territory.”
“On a six-month moving average basis, by age, confidence for consumers under 35 remained the highest, while confidence among those aged 35-54 showed the greatest improvement,” they Conference Board said. “By income, confidence was mixed, but generally higher-income groups were more optimistic. By generation, confidence for Gen Z and Millennials remained the highest, while confidence fell the most for the Silent Generation on a six-month moving average basis. By political affiliation, confidence among Independents and Democrats softened while Republicans were somewhat more positive.”
Consumers' write-in responses on the economy were mostly pessimistic once again in July. “References to prices and oil and gas eased in frequency but remain elevated,” the report said. “Comments about food and grocery prices increased. Mentions of war, geopolitics, and conflict eased during the sample period. However, as the fighting has reaccelerated quite recently there could be an increase in these mentions in the revised data for July. Notably, references to jobs and unemployment picked up slightly.”
Turning to price pressures, consumers' average and median 12-month inflation expectations were less elevated in July compared to the previous month. “Most consumers—61.3%, unchanged from June—still expected higher interest rates over the next 12 months,” they noted. “Notwithstanding recent volatility in the equity markets, consumers still expected higher stock prices a year from now.”
