Gold Falls While Consumer Confidence Rises
Posted by Brian Ford on May 28, 2013
Gold prices started the week on somewhat of a sour note as the news came out that consumer confidence is higher than it has been in five years. According to The Conference Board, a consumer research firm, the consumer confidence index among U.S. consumers rose to 76.2, which is the highest level it has reached since 2008 and also represents a substantial increase from April’s index report of 69.0.
Economists polled by MarketWatch expected the CCI to rise slightly to 72.3 but did not predict such a large jump in consumer confidence. Factors that aided the rise of the CCI include consumers’ optimism about the state of the U.S. and world economies, less media reports of Middle East war, a stronger U.S. currency and generally positive-looking numbers coming from the U.S. Commerce Department over the last few weeks.
According to Lynn Franco, the director of economic indicators at the Conference Board, consumers are “considerably more upbeat about future economic and job prospects. “Back-to-back monthly gains suggest that consumer confidence is on the mend and may be regaining the traction it lost due to the fiscal cliff, payroll-tax hike and sequester,” Franco added.
Consumer confidence charts have appeared to be a roller coaster of the most extreme kind in recent years due to various geo-political and economic events. Traditionally, higher consumer confidence translates into lower gold prices because investors see less need for safe-haven assets like certified gold coins. As of noon EST the gold price was down $5.80 to leave gold spot at $1381 after climbing as high as $1399 and falling as low as $1375 early this morning.