Gold prices fall as US consumer confidence rises in May

The Consumer Confidence Index rose to 98 in May, well above economists' median forecast of 87 and also above April's revised 85.7, the Conference Board said Tuesday.

Of which, the Present Situation Index, which assesses current business and labor market conditions, increased by 4.8 points to 135.9.

The Expectations Index, which reflects the short-term outlook for income, business and employment, rose sharply by 17.4 points to 72.8. However, this figure is still below the threshold of 80, which usually signals the risk of economic recession.

Gold prices fell to a session low shortly after the data was released. As of press time, spot gold was trading at $3,297.15 an ounce, down 1.35% from the start of the session.

“Consumer confidence improved in May after five straight months of declines,” said Stephanie Guichard, senior economist at The Conference Board. “The recovery was evident before the US-China trade deal was signed on May 12, but accelerated more sharply afterward.

The improvement came largely from consumer expectations as all three components of the Business Conditions, Employment Outlook and Future Income Indexes rose from April lows."

“Consumers were less pessimistic about business conditions and job prospects over the next six months and more optimistic about their income prospects. Their assessment of current conditions was also more positive. However, while they felt that current business conditions were better than last month, their perception of current job prospects weakened for the fifth consecutive month,” she added.

The recovery in confidence in May was seen across all age groups, incomes and political orientations, with Republicans seeing the biggest improvement. However, on a six-month average, confidence still declined from previous months of weakness.

“As the stock market continued to recover in May, consumers expected stock prices to rise, with 44% expecting stock prices to rise over the next 12 months (up from 37.6% in April) and only 37.7% expecting prices to fall (up from 47.2% in April). This was one of the survey questions that saw the strongest improvement following the May 12 trade deal,” Guichard noted.

Once again, respondents listed tariffs as a top concern. “Consumers continue to be concerned about tariffs raising prices and hurting the economy, but some are hopeful that existing and upcoming trade deals will support growth,” the report said. “While inflation and higher prices remained concerns in May, some also cited lower inflation and cheaper gasoline.”