What’s the Consumer Sentiment Index?
The CSI (Consumer Sentiment Index) is a key indicator that gauges the average US consumer’s confidence level. This is an important indicator for retailers, economists, and investors. Thomson Reuters and the University of Michigan release the US CSI every month. The index rises when consumers gain confidence in the economy and vice versa.
Reading for June is up
The Thomson Reuters and University of Michigan’s final reading for consumer sentiment for June 2015 rose to 96.1, which is higher than the preliminary reading of 94.6. This is also a huge jump from May’s final reading of 90.7. The reading for May was the lowest since November 2014.
Strong consumer sentiment is in line with the increasing consumer spending. According to Richard Curtin, chief economist of the survey, “Consumer spending will remain the driving force of economic growth in 2015. Overall, the data indicate growth in consumer spending of 3.0 percent in 2015.”
Investment impact on gold
Stronger consumer sentiment usually indicates improving incomes and positive prospects for the economy. This leads to a strengthening US dollar. It also makes dollar-denominated gold less attractive.
As a result, high consumer sentiment is negative for gold (GLD) and gold stocks such as New Gold (NGD), Yamana Gold (AUY), B2Gold (BTG), and Agnico Eagle Mines (AEM). It’s also negative for ETFs that invest in these stocks like the VanEck Vectors Gold Miners ETF (GDX). New Gold and Yamana Gold account for 2.2% and 4.1% of GDX’s total holdings, respectively.