Gold Prices Remain Below Critical Support Following Mixed U.S. Construction Data
(Kitco News) - Gold prices remain under pressure and below critical support, following the release of mixed U.S. housing construction data.
The Commerce Department’s latest report showed that U.S. housing starts rose 5% into a seasonally adjusted annual rate of 1.35 million units in May, compared to April’s revised figure of 1.286 million starts. Consensus forecasts compiled by most news organizations called for starts to be around 1.31 million.
Meanwhile, the Commerce Department said the tally of building permits – important as an indicator of future construction activity – fell by 4.6% last month to an annualized rate of 1.301 million. Economists were expecting to see an increase to 1.35 million.
The gold market appears to be ignoring U.S. economic data as it is dragged lower by a stronger U.S. dollar. August gold futures last traded at $1,276.10 an ounce, down 0.31% on the day.
While future growth in the housing sector appears to be losing momentum, Royce Mendes, senior economist at CIBC World Markets, said that they expect the trend to reverse later in the year.
“The only fly in the ointment today was the larger-than-expected slowdown in building permits which cooled to a pace of 1301K from 1364K in April. Nevertheless, despite rising interest rates and higher lumber prices, we continue to see strong demand for housing in the US,” he said. “A nascent pickup in the homeownership rate resulting from higher incomes combined with tight inventories should work to support homebuilding over the remainder of the year. All told, another positive reading for Q2 GDP tracking, which is on course to see an advance of roughly 4%.”