Gold Price Shrugs Off Rise In U.S. Consumer Confidence To 118.9
New York (June 27) Gold prices are relatively unchanged, holding on to some positive gains following economic data that highlight strong optimism among U.S. consumers.
Tuesday, the U.S. Conference Board, reported that its consumer confidence index rose to a reading of 118.9 in June, up from May’s revised reading of 117.9. Economists were expecting to see relatively weaker consumer sentiment, with consensus forecasts calling for a reading around 116.1.
Gold was showing modest gains ahead of the report as the market continued to recover from Monday’s flash crash. Prices are relatively unchanged in initial reaction with August gold futures last trading at $1,250.10 an ounce, up 0.30% on the day.
The gains in the overall index were the result of growing optimism in current economic conditions. The report noted that the Present Situation Index rose to 146.3 from the previous reading of 140.60, its highest level since June 2001; however, the Expectations Index to 100.6 from May’s reading of 102.3.
“Consumers’ assessment of current conditions improved to a nearly 16-year high,” said Lynn Franco, director of economic indicators at The Conference Board. “Overall, consumers anticipate the economy will continue expanding in the months ahead, but they do not foresee the pace of growth accelerating.”
Looking at the labor market, U.S. consumers continue to have a positive outlook. In the household survey, the report noted that those stating jobs are “plentiful” rose 32.8%, up from May’s level of 30%; at the same time, those claiming jobs are “hard to get” decreased to 18% from the previous level of 18.3%.
Traders closely watch the consumer optimism survey as it a potential leading indicator for economic growth. The more optimistic consumers feel, the more likely they are going to spend money and vice versa. However, despite the current positive sentiment in the marketplace, consumers have been reluctant to spend money as retail sales have disappointed expectations for four consecutive months.
“While Q2 consumer spending is still expected to be better than the anemic growth rate observed in the first quarter, recent data releases could put some pressure on forecasts for consumer spending for the months ahead,” said Royce Mendes, senior economist at CIBC World Markets.
Source: KitcoNews
