(Kitco News) Gold prices ticked down after the U.S. consumer confidence index came in better-than-expected in July.
American consumer confidence index rose to 129.1 in July from June’s upwardly revised reading of 128.9, the U.S. Conference Board reported Tuesday. Economists were expecting to see the index at a reading of 123.9.
Following the release of the data, gold prices edged down from daily highs, with August Comex gold futures last trading at $1,796.10 an ounce, down 0.17% on the day.
The Present Situation Index, which describes consumers’ views on current business and labor market conditions, advanced to 160.3 from 159.6. At the same time, the Expectations Index, which represents consumers’ short-term outlook on income, business, and labor market conditions, was largely unchanged at 108.4.
American consumer confidence remains at the highest level since February 2020, said Lynn Franco, senior director of Economic Indicators at The Conference Board.
“Consumers’ appraisal of present-day conditions held steady, suggesting economic growth in Q3 is off to a strong start. Consumers’ optimism about the short-term outlook didn’t waver, and they continued to expect that business conditions, jobs, and personal financial prospects will improve,” Franco said.
In the meantime, short-term inflation expectations somewhat retreated but remained elevated, he added.
“Spending intentions picked up in July, with a larger percentage of consumers saying they planned to purchase homes, automobiles, and major appliances in the coming months. Thus, consumer spending should continue to support robust economic growth in the second half of 2021,” Franco wrote.
Looking at the labor market, the short-term outlook on jobs was mixed. The proportion expecting more jobs in the months ahead increased to 27.7% from 26.6%, while those anticipating fewer jobs also rose to 16.8% from 15.7%.
Traders closely watch the consumer optimism survey as it is a potential leading indicator for economic growth. The more optimistic consumers feel, the more likely they are going to spend money and vice versa.
Economists said consumer spending on services is also expected to increase in the second half of the year, but new COVID-19 infections pose a risk to this outlook, said CIBC Capital Markets senior economist Katherine Judge.
“While spending intentions for autos, homes, and appliances all rose slightly, spending on services is expected to increase ahead, although the rise in new Covid cases presents a downside risk,” Judge said.
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