Gold Atracts Some Buying After 5% Drop In Housing Starts, 4% Drop In Building Permits
Editor's Note: Kitco readers, have your say! Check out our newest feature – KITCO CHAT! – where you can share your comments and ask questions directly to us.
(Kitco News) - The gold market is seeing some renewed buying but remains under pressure for the third straight session following weaker-than-expected U.S. housing data.
Wednesday, the Commerce Department’s latest report showed that U.S. housing starts fell 4.8% in to a seasonally adjusted annual rate of 1.155 million units in July, down from June’s revised rate of 1.213 million units. Consensus forecasts compiled by most news organizations called for starts to be around unchanged, holding around 1.22 million units.
The report noted that construction of new homes is down 5.6% compared to levels seen in July 2916.
Meanwhile, the Commerce Department said the tally of building permits – important as an indicator of future construction activity – fell by 4.1% last month to an annualized rate of 1.223 million, down from June’s revised rate of 1.275 million. Economists were expecting to see1.25 million permits issued.
For the year, the report noted that permits are up 4.1% from levels seen last year.
The data has had a modest impact on gold prices, which is being weighed down by a rising U.S. dollar, rising bond yields and stronger equity markets. December gold futures last traded at $1,277.80 an ounce, down 0.15% on the day.
The Federal Reserve has noted strength and resilience in the housing market as a sign of ongoing momentum in the economy; however, concerns among economists are starting to grow that this sector could start to drag down growth.
“After being a drag on growth in the second quarter, we'd expected that residential investment would be a positive in Q3, but we'll need to see some improvement in the final two months for that to come through,” said Andrew Grantham, senior economist at CIBC World Markets.
However, he added that with permits holding above housing starts, there is still time for the construction sector to pick up momentum.