U.S. Housing Construction Data Helps Gold’s Rally
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(Kitco News) - The release of the mixed U.S. housing data from May helped rallying gold prices on Tuesday, pushing the metal up more than 1% on the day.
U.S. housing starts declined 0.9% to a seasonally adjusted annual rate of 1.269 million units in May, the Commerce Department said on Tuesday. Consensus forecasts compiled by most news organizations called for starts to be around 1.296 million.
April’s data was upwardly revised to 1.281 million units. But, for the year, housing starts declined 4.7% from the May 2018 levels.
At the same time, building permits data, which is a precursor to future projects, edged up 0.3% in May to 1.294 million from April’s 1.290 million. For the year, building permits declined 0.5% from the May 2018 levels.
Following the release, gold prices saw a clear uptick following already solid gains from earlier this morning. August Comex gold futures were last trading at $1,357, up 1.05% on the day.
Prior to the release, gold prices were mainly driven by market’s perception of more accommodative monetary policies from the world’s major central banks as well as some chart-based buying, said Kitco’s senior technical analyst Jim Wyckoff.
"Traders and investors worldwide are on central bank alert this week. European Central Bank President Mario Draghi gave a dovish speech on monetary policy today by saying the ECB could cut interest rates and/or expand its bond-buying program (quantitative easing). Draghi’s comments came as dour trade data was released from the Euro zone today," wrote Wyckoff. "The Federal Open Market Committee (FOMC) meeting begins this morning and ends Wednesday afternoon with a statement. Most believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months."