Stagflation Signal Supports Gold as Sentiment Crashes

The University of Michigan's Consumer Sentiment Index took a significant hit in August, plummeting to 51. This fall missed the predicted consensus of 54.5 and marks the end of two consecutive months of improvement.

Inflation expectations rose concurrently, reaching 4.3%. The simultaneous drop in growth confidence and increase in price expectations creates a stagflation signal that restricts the Federal Reserve's options and extends gold's support going into September.

The recent data prints have had a substantial impact on the market, with five key indicators - retail sales, consumer sentiment, CPI, PPI, and Hormuz - shifting the odds of a September Fed rate-hike by 27 points. This shift has significant implications for gold prices.