Gold Prices Remain Firm Following 2.6% Drop In Pending Home Sales
(Kitco News) - It has not been a good week for the U.S. housing sector but gold is seeing little benefit from disappointing data, holding on to modest gains.
The latest housing data shows that fewer U.S. consumers started the process of buying a home, the National Association of Realtors (NAR) said in its latest report Thursday.
The association’s Pending Home Sales Index declined 2.9% in November to a reading of 102.1, compared to October’s increase of 0.5%. The report was significantly weaker than expected with economists forecasting a 0.8% increase.
This is the 10th consecutive decline in the index.
Despite the disappointing housing sales numbers, gold saw little initial reaction. February gold futures last traded at $1,232 an ounce, up 0.18% on the day.
“The recent rise in mortgage rates have reduced the pool of eligible homebuyers,” said Lawrence Yun, NAR chief economist.
Pending home sales is the third disappointing housing report released in the past two weeks. Last week the NAR said that existing home sales las month were relatively flat.
Wednesday, the Commerce Department dropped 8.9% last month, dropping to the lowest level since March 2016.
In the current environment, Yun said that the Federal Reserve should look to be less aggressive in tightening interest rates.
“The inflationary pressure is all but disappearing. Given that condition, there is less of a need to aggressively raise interest rates. Looking at the broader economy and keeping in mind that the housing sector is a great contributor to the economy, it would be wise for the Federal Reserve to slow the raising of rates to see how inflation develops," he said.