The gold market is trading near historic highs ahead of the weekend after the latest data showed that consumer confidence in the US was deteriorating beyond all expectations, while inflation expectations and recession fears rose dramatically once again.
The University of Michigan announced on Friday that the preliminary reading of its consumer sentiment survey was 50.8 in April, well below March's final reading of 57. The data was much worse than expected, as economists' consensus forecast had expected a reading of 54.5.
“Consumer confidence fell for the fourth consecutive month, with an 11% drop since March,” said Joanne Hsu, director of Consumer Surveys. ”This decline was, like last month's, widespread and unanimous across age, income, education, geographic region, and political affiliation. Confidence has lost more than 30% since December 2024 amid growing concerns about the evolution of the trade war, which has fluctuated throughout the year.”
Gold prices are approaching new all-time highs this morning following the release of the data at 10 a.m. EST, with spot gold last trading at $3,232.91 per ounce, representing a gain of 1.81% on the day.
Index components showed acute concern about the potential for higher inflation and recession in the coming years.
“Consumers report multiple warning signs that increase the risk of recession: expectations about business conditions, personal finances, income, inflation, and labor markets continued to deteriorate this month,” Hsu said in the report. “The proportion of consumers expecting unemployment to rise next year increased for the fifth consecutive month and is now more than double the November 2024 figure and the highest since 2009. This lack of confidence in the labor market contrasts sharply with that of recent years, when vigorous spending was mainly sustained by strong labor markets and incomes.”