(Kitco News) – After spending the morning in negative territory, gold prices are once again on the move higher, getting a boost following weaker than expected U.S. consumer sentiment data.
Friday, preliminary data from the University of Michigan showed consumer sentiment falling to 66.9, down from October’s reading 71.7. The data significantly missed expectations as economists were expecting to see a reading of around 72.5.
“This is the lowest in a decade and the University of Michigan noted that one-in-four consumcer cited inflationary reductions in their living standards. Half of households anticipated reduced real incomes next year,” said Adam Button, chief currency strategist at Forexlive.com.
Button noted that the U.S. dollar has fallen in reaction to the report, which is also helping to support gold prices.
The gold market has jumped back into positive territory following the data. December gold futures last traded at $1,868.40, up 0.24% on the day.
The data also shows that consumer inflation expectations continue to move higher. The report said that consumers expect annual inflation to rise to 4.9%, up from the previous estimate of 4.8%.
Investor fears that inflation is rising out of control picked up significantly this week after the Consumer Price Index showed an annual rise of 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 future economic growth.
“The unexpectedly large drop in the University of Michigan consumer confidence index in early November reflects the impact of broadening inflation fears, suggesting any rebound in real consumption over the coming quarters will be relatively muted,” he said.
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