Sharp Drop In U.S. Consumer Confidence Provides Little Safe-Haven Support For Gold

(February 25, 2025 - Neils Christensen, Kitco News)

(Kitco News) - A sharp drop in U.S. consumer confidence is not having much impact on the gold market as prices continue to see solid selling pressure after hitting a fresh all-time high on Monday.

The Consumer Confidence Index dropped to 98.3, down from January’s reading of 104.1, the Conference Board said on Tuesday. The data was weaker than expected, as economists had been looking for a less dramatic drop to 102.7.

The report said that this was the biggest one-month decline since August 2021.

“This is the third consecutive month-over-month decline, bringing the Index to the bottom of the range that has prevailed since 2022. Of the five components of the Index, only consumers’ assessment of the present business conditions improved, albeit slightly,” said Stephanie Guichard, Senior Economist of Global Indicators at The Conference Board. “Views of the current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high.”

The disappointing data is not providing any safe-haven support for gold. Spot gold last traded at $2,985.30 an ounce, down nearly 1% on the day.

The report noted a broad-based decline in consumer sentiment. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 3.4 points to 136.5. Meanwhile**,** the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions— dropped 9.3 points to 72.9.

“For the first time since June 2024, the Expectations Index fell below the threshold of 80 that usually signals a recession ahead,” the report said. “February’s fall in confidence was shared across all age groups but was deepest for consumers between 35 and 55 years old.”

The report also noted that consumer inflation expectations are picking up. The report said that the average 12-month inflation expectations surged to 6% from 5.2%.

“This increase likely reflected a mix of factors, including sticky inflation as well as the recent jump in prices of key household staples like eggs and the expected impact of tariffs,” the report said.