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 session lows 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. “This recovery occurred before the US-China trade deal was signed on May 12, but accelerated more strongly afterward.

The improvement came mainly from consumer expectations as all three components of the index – Business Conditions Expectations, Employment Prospects and Future Income – rose from April lows."

She added: "Consumers are less pessimistic about business conditions and employment opportunities over the next six months and more optimistic about income prospects. Their assessment of current conditions is also more positive. However, while they feel that current business conditions are better than last month, their perception of current employment opportunities has weakened for the fifth consecutive month."

The recovery in confidence in May was seen across all age, income and political groups, with Republicans showing the strongest improvement. However, on a six-month average, confidence still declined due to previous months of weakness.

Ms Guichard also highlighted: "As the stock market continued to recover in May, consumers expected stock prices to increase, with 44% predicting stock prices to increase over the next 12 months (vs. 37.6% in April) and only 37.7% expecting prices to decrease (vs. 47.2% in April). This was one of the survey questions that saw the strongest improvement following the May 12 trade deal."

Once again, respondents cited 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 a concern in May, some also cited lower inflation and cheaper gasoline.”