The gold market is trading near historic highs ahead of the weekend after the latest data showed that consumer confidence in the US was deteriorating beyond all expectations, while inflation expectations and recession fears rose dramatically once again.

The University of Michigan announced on Friday that the preliminary reading of its consumer sentiment survey was 50.8 in April, well below March's final reading of 57. The data was much worse than expected, as economists' consensus forecast had expected a reading of 54.5.

“Consumer confidence fell for the fourth consecutive month, with an 11% drop since March,” said Joanne Hsu, director of Consumer Surveys. ”This decline was, like last month's, widespread and unanimous across age, income, education, geographic region, and political affiliation. Confidence has lost more than 30% since December 2024 amid growing concerns about the evolution of the trade war, which has fluctuated throughout the year.”

Gold prices are approaching new all-time highs this morning following the release of the data at 10 a.m. EST, with spot gold last trading at $3,232.91 per ounce, representing a gain of 1.81% on the day.

Index components showed acute concern about the potential for higher inflation and recession in the coming years.

“Consumers report multiple warning signs that increase the risk of recession: expectations about business conditions, personal finances, income, inflation, and labor markets continued to deteriorate this month,” Hsu said in the report. “The proportion of consumers expecting unemployment to rise next year increased for the fifth consecutive month and is now more than double the November 2024 figure and the highest since 2009. This lack of confidence in the labor market contrasts sharply with that of recent years, when vigorous spending was mainly sustained by strong labor markets and incomes.”

Annual inflation expectations rose from 5.0% last month to 6.7% this month, the highest since 1981, marking four consecutive months of unusually high increases of 0.5 percentage points or more, he added. This month's increase was seen across all three political affiliations. Long-term inflation expectations rose from 4.1% in March to 4.4% in April, reflecting a particularly sharp increase among independents.

Harry Chambers, deputy economist at Capital Economics, said stagflation is now clearly on consumers' minds.

“The further decline in the University of Michigan Consumer Sentiment Index in April, coupled with the rise in one- and five-year inflation expectations, suggests that tariff-related fears, which had dampened sentiment in recent months, are here to stay,” he wrote in a note to Kitco News. “The press release also noted that 'the proportion of consumers expecting unemployment to rise next year is the highest since 2009,' suggesting that confidence in the labor market is also declining. Another notable detail in the release is the sharp decline in confidence among Republicans.”

“Despite falling energy prices, one-year inflation expectations rose from 5.0% to 6.7%, likely reflecting directly last week's imposition of tariffs,” Chambers noted. “However, what is most concerning is that five-year inflation expectations rose again, to 4.4%, and are now at their highest level since 1991. Households seem to have reached the same conclusion as the markets: tariffs will cause lasting damage to the US economy."

Ernest Hoffman, Kitco

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