Gold Sees Little Reaction To 5.5% Drop In May U.S. Housing Starts
(Kitco News) - Gold prices remain near their three-week lows, seeing little reaction to weaker than expected U.S. housing data.
Friday, The Commerce Department’s said that U.S. housing starts fell 5.5% to a seasonally adjusted annual rate of 1.092 million units in May. Consensus forecasts compiled by most news organizations called for starts to be around 1.25 million.
This is the second month that month of weaker housing starts data have disappointed market expectations; April’s data was revised lower to 1.156 units.
For the year, housing starts are down 2.4% from May 2016 starts.
Not only is the current housing construction sector is seeing a period of weakness, building permit data does not bode well for future projects. The report noted that building permits last month dropped 4.9% to 1.168 million permits, down from April’s level of 1.228 million.
Permits are down 0.8% compared to May 2016.
Gold prices are seeing a modest technical bump after hitting a three-week low Thursday; however, the market has seen little reaction following the disappointing data. August gold futures last traded at $1,257.70 an ounce, up 0.25% on the day.
Economists note that the housing sector puts further pressure on the Federal Reserve’s economic outlook.
While disappointing data shouldn’t be surprising anymore given the recent flow of economic data, Andrew Grantham said that the numbers could have an impact on second-quarter economic growth.
“Overall, we were expecting that residential investment would be a smaller contributor to growth in Q2 than it was in the first quarter, however, these figures suggest an even weaker profile than we were anticipating,” he said.