Spot gold falls below $3,290/oz as U.S. Consumer Confidence rises to 98 in May

(Kitco News) – Gold prices fell to fresh session lows after the latest data showed U.S. consumer sentiment improving further than expected this month.

The Consumer Confidence Index rose to 98 in May, well above economists’ consensus forecast for an 87 reading and also below the downwardly revised 85.7 print in April, the Conference Board said on Tuesday.

The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose 4.8 points to 135.9 in May, while the Expectations Index, representing consumers’ short-term outlook for income, business, and labor market conditions, surged 17.4 points to 72.8, but remained well below the threshold of 80 which typically signals a recession ahead.

Gold prices fell to session lows following the 10 am EDT data release, with spot gold last trading at $3,297.15  per ounce at the time of writing for a loss of 1.35% on the session.

“Consumer confidence improved in May after five consecutive months of decline,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards. The monthly improvement was largely driven by consumer expectations as all three components of the Expectations Index—business conditions, employment prospects, and future income—rose from their April lows.”

“Consumers were less pessimistic about business conditions and job availability over the next six months and regained optimism about future income prospects,” she added. “Consumers’ assessments of the present situation also improved. However, while consumers were more positive about current business conditions than last month, their appraisal of current job availability weakened for the fifth consecutive month.”

May’s rebound in confidence was reflected across all age groups and all income groups and political affiliations, with the strongest improvements among Republicans, but on a six-month moving average basis, confidence in all age and income groups was still down due to previous monthly declines.

“With the stock market continuing to recover in May, consumers’ outlook on stock prices improved, with 44% expecting stock prices to increase over the next 12 months (up from 37.6% in April) and 37.7% expecting stock prices to decline (down from 47.2% in April),” Guichard added. “This was one of the survey questions with the strongest improvement after the May 12 trade deal.”

Respondents once again pointed to tariffs as their number-one concern. “Notably, consumers continued to express concerns about tariffs increasing prices and having negative impacts on the economy, but some also expressed hopes that the announced and future trade deals could support economic activity,” the report said. “While inflation and high prices remained an important concern for consumers in May, there were also some mentions of easing inflation and lower gas prices.”