Gold prices jump into positive territory following drop in UoM consumer sentiment survey
(Kitco News) -After spending the morning in negative territory, gold pricesare once again on the move higher, getting a boost following weaker thanexpected U.S. consumer sentiment data.
Friday, preliminary data from the University of Michigan showedconsumer sentiment falling to 66.9, down from October’s reading 71.7. The datasignificantly missed expectations as economists were expecting to see a readingof around 72.5.
“This is the lowest in adecade and the University of Michigan noted that one-in-four consumcer citedinflationary reductions in their living standards. Half of householdsanticipated reduced real incomes next year,” said Adam Button, chief currencystrategist at Forexlive.com.
Button noted that the U.S.dollar has fallen in reaction to the report, which is also helping to supportgold prices.
The gold market has jumped back into positive territoryfollowing the data. December gold futures last traded at $1,868.40, up 0.24% onthe day.
The data also shows that consumer inflation expectationscontinue to move higher. The report said that consumers expect annual inflationto rise to 4.9%, up from the previous estimate of 4.8%.
Investor fears that inflation is rising out of control pickedup significantly this week after the Consumer Price Index showed an annual riseof 6.2% last month, the highest increase since 1990. The latest inflation data would not be reflected the currenty survey, so some economists suggest that sentiment could get even worse.
Michael Pearce, senior U.S. economist at Capital Economics,said that the latest consumer sentiment data does not bode well for futureeconomic growth.
“The unexpectedly large drop in the University ofMichigan consumer confidence index in early November reflects the impact ofbroadening inflation fears, suggesting any rebound in real consumption over thecoming quarters will be relatively muted,” he said.By Neils ChristensenFor Kitco News
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