The gold market continues to hold strong, maintaining gains above $2,600 per ounce, as consumer optimism in the U.S. improves and inflation fears subside, according to the latest report from the University of Michigan (UofM).
On Friday, the UofM’s preliminary Consumer Confidence survey showed an increase to 69, up from August’s 67.9, exceeding economists’ expectations of a more modest rise to 68.3.
“Consumer sentiment climbed to its highest level since May 2024, marking the second consecutive month of improvement with a 2% rise from August. This boost was driven by better buying conditions for durable goods, as consumers perceived more favorable pricing,” said Joanne Hsu, director of the UofM Survey of Consumers.
Despite the positive economic data, the gold market isn’t seeing fresh bullish momentum but remains near its recent record highs. December gold futures last traded at $2,606 an ounce, reflecting a nearly 1% gain for the day.
In addition to increased confidence in the economy, consumers are showing greater optimism about inflation. The survey revealed that inflation expectations for the next 12 months have dropped to 2.7%, down from August’s 2.8%.
“This is the lowest inflation expectation reading since December 2020 and falls within the 2.3–3.0% range seen in the two years before the pandemic. Long-term inflation expectations remain relatively stable, ticking up slightly from 3.0% last month to 3.1%,” Hsu noted.
Analysts suggest that this latest report strengthens expectations for a 25 basis point interest rate cut by the Federal Reserve next week. While the Fed may not need to take aggressive action, steady rate cuts are anticipated to help support a slowing U.S. economy.
