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Saturday, January 29, 2022

Gold price in neutral territory as U.S. consumers seeing inflation at 4.9% in one year

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(Kitco News) – The gold market is not finding much traction even as U.S. consumers expect inflation pressures to remain elevated through 2022, according to the latest University of Michigan Consumer Sentiment Survey.

The preliminary survey results show that consumer sentiment dropped to 68.8, down from December’s reading of 70.0. However, according to some market analysts, the survey’s inflation expectations is garnering the most attention.

The report said that one-year inflation expectations rose to 4.9%, up from December’s reading of 4.8%. Meanwhile, 5 to 10-year inflation expectations rose to 3.1% up from 2.9%.

Inflation data has been getting a lot of attention lately. Earlier this week the Consumer Price Index showed an annual rise of 7.0%

However, the latest data is not having much impact on gold as prices trading in neutral territory. Spot gold last traded at $1,823.20 an ounce, up 0.05% on the day.

Andrew Hunter, senior U.S. economist, at Capital Economics, said that rising inflation pressure could lead to weaker economic activity through the year.

“With the squeeze on purchasing power from surging prices unlikely to end any time soon, this all suggests that the sharp slowdown in real consumption growth flagged by the December retail sales data may be a sign of things to come in 2022,” Hunter said. “The additional bad news is that consumers’ longer-term inflation expectations rose to a near-11 year high of 3.1% in January. That provides another reason to suspect that the Fed’s hawkish turn won’t be derailed by weaker economic growth.”


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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