Gold Price Ebbs, S&P 500 Wavers as Consumer Sentiment Worsens

GOLD PRICE PEELS BACK FROM SESSION HIGHS AS S&P 500 INDEX STUTTERS FOLLOWING CONSUMER SENTIMENT DATA

• Consumer sentiment data for November revealed a notable decline and missed estimates
• Gold prices drift lower from session highs despite a rise in future inflation expectations
• S&P 500 Index under pressure as consumers see less favorable economic conditions ahead

Preliminary consumer sentiment data released by the University of Michigan just crossed the wires and could be weighing negatively on trader risk appetite. Consumer sentiment for November reported a drop to 77.0 from the prior reading of 81.8 and also missed the market forecast looking for 82.0. According to the report, the US presidential election outcome and resurgence of coronavirus concerns largely contributed to the deterioration in consumer sentiment.

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NOVEMBER 2020 CONSUMER SENTIMENT REPORT (UNIVERSITY OF MICHIGAN)

Chart Source: DailyFX Economic Calendar

Also, the DailyFX Economic Calendar highlights how consumer inflation expectations continue to climb. The 5-year inflation expectations figure came in at 2.6% from 2.4% reported previously. Interestingly, gold price action reacted negatively to this development with the precious metal peeling back slightly from session highs.

GOLD PRICE CHART: 15-MINUTE TIME FRAME (13 NOV 2020 INTRADAY)

Chart by @RichDvorakFX created using TradingView

Gold is currently fluctuating around the $1,890-price level at the time of writing and up about three-quarters of a percent on the day. With consumer sentiment worsening amid mounting virus fear, there could be potential for gold to face headwinds if inflation figures decline as economic activity flounders. That said, gold prices could stay afloat more broadly and look past short-term deflationary pressures with the prospect of a coronavirus vaccine on the horizon.

S&P 500 INDEX PRICE CHART: 15-MINUTE TIME FRAME (09 NOV TO 13 NOV 2020)

Chart by @RichDvorakFX created using TradingView

The S&P 500 Index has also dipped from its gap higher at the New York opening bell. Stocks are likely facing renewed selling pressure considering the headline consumer sentiment reading declined 5.9% while the index of consumer expectations tumbled 10.0% month-over-month. These are the lowest readings since August. Worsening consumer sentiment has potential to hamper spending habits headed into the holiday shopping season right around the corner. Consumer sentiment could also remain subdued without another fiscal stimulus deal.

— Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight