Consumers Drowning in Debt, Inflation Stubborn at 2.9%, Gold Holds Strong at US$3,600

US consumer borrowing has jumped again, with the latest figures showing a $16 billion rise in credit, well above the $10 billion expected. It is another sign that many Americans are increasingly reliant on debt simply to manage day-to-day expenses. While this growth in credit supports spending in the short term, it also raises red flags about financial stability. If wage growth slows or the job market weakens, the burden of higher debt repayments could quickly weigh on households and drag on broader economic activity.

At the same time, inflation remains stubborn. The latest Consumer Price Index reading came in at 2.9%, pushing right up against the upper edge of the Fed’s comfort zone. For months, markets have been pricing in a series of interest rate cuts, assuming that inflation was under control and that the central bank would focus on easing financial conditions. But with CPI refusing to roll over, the Fed faces a difficult balancing act. Cut rates too aggressively, and it risks re-igniting inflation; hold steady, and it risks tightening pressure on already stretched consumers who are leaning on credit to survive.

Gold has been the clear winner in this environment. Prices are consolidating at around US$3,600, after an extraordinary rally that has pushed the precious metal to repeated record highs. The market now wonders if this is simply a pause before another surge, or the start of a breather after months of relentless gains. With consumer debt ballooning and inflation edging higher, demand for safe-haven assets remains strong. For many investors, gold continues to represent not just a hedge against inflation, but also protection against the growing uncertainty around household balance sheets, monetary policy, and the direction of the economy.