Gold price could struggle as U.S. consumer confidence stabilizes in July

(Kitco News) – The gold market continues to hover around $3,300 an ounce, but better-than-expected consumer optimism could put some downward pressure on gold as its safe-haven allure weakens.

The Consumer Confidence Index rose to 97.2, up from June’s revised reading of 95.2, the Conference Board reported on Tuesday.
The data was better than expected, as economists had anticipated a smaller increase to 95.9.

“Consumer confidence has stabilized since May, rebounding from April’s plunge, but remains below last year’s heady levels,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board in the report.

The gold market is holding on to critical support levels, but analysts have said that waning safe-haven interest could ultimately weigh on the precious metal. Spot gold last traded at $3,315.60 an ounce, roughly unchanged on the day.

Although sentiment has improved, the report noted that recession fears haven’t completely faded.

The report said its Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 1.5 points to 131.5. Meanwhile, the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—rose 4.5 points to 74.4.

“Expectations remained below the threshold of 80 that typically signals a recession ahead for the sixth consecutive month,” the report said.

The report noted that President Donald Trump’s trade war remains a worry for consumers.

“Consumers’ write-in responses showed that tariffs remained top of mind and were mostly associated with concerns that they would lead to higher prices. In addition, references to high prices and inflation rose in July, even though consumers’ average 12-month inflation expectations eased slightly to 5.8%, down from 5.9% in June and a peak of 7% in April,” the report said.

Meanwhile, market fears surrounding the ongoing trade war have eased after the Trump Administration announced a deal with Japan and the European Union, which would see import costs rise 15%.