Gold Prices Near Session Highs Following In-Line U.S. Housing Construction Data
(Kitco News) - Gold prices continue to push higher as U.S. housing data come in line with expectations.
The Commerce Department's latest economic data showed that U.S. housing starts rose 1.5% in to a seasonally adjusted annual rate of 1.23 million units in October, up from September’s revised rate of 1.21 million. Consensus forecasts compiled by most news organizations called for starts to be around 1.23 million.
Annually, housing construction is down 2.9% compared the activity recorded in October 2017.
Meanwhile, the Commerce Department said the tally of building permits – important as an indicator of future construction activity – rose by 0.6% last month to an annualized rate of 1.63 million, down from September’s revised rate of 1.27 million. The data were also in line with expectations.
For the year, building permits are down 6% compared to last year.
Gold prices have been pushing higher as investors search for safe-haven assets as equity markets continue to fall due to growing concerns surrounding the global economy. December gold futures last traded at $1,229 an ounce up 0.30% on the day.
Investors are watching the housing sector very closely as it has a major impact on U.S. gross domestic product. Some economists have said that the sector is under pressure as rising home prices and rising interest rates -- pushing mortgage rates higher -- are pricing many new home buyers out the of the market.
Katherine Judge, senior economist at CIBC World Markets, said that while they expect to see weaker construction data, the bank does not expect to see a collapse in the sector.
“The weaker trajectory seen for building permits lately suggests that homebuilding likely doesn't have much further room to run,” she said. “However, rising wages should continue to support demand in the near term, with higher home prices supporting homebuilding.”