Gold price sees little reaction to 16.9% rise in U.S. housing construction
(Kitco News) - The gold market is not finding any new momentum following mixed U.S. housing construction data.
U.S. housing starts rose a whopping 16.9% to a seasonally adjusted annual rate of 1.608 million units in December, the Commerce Department said on Friday. Consensus forecasts compiled by most news organizations called for starts to be around 1.38 million. October’s data was upwardly revised to 1.375 million units.
For the year, housing starts are up more than 40-%, compared to December 2018 levels.
At the same time, building permits data, which is a precursor to future projects, was down 3.9% at 1.416 million lath month, down from November’s revised level of 921,000. Economists were expecting to see 1.y million permits issued. Building permits are up 5.8% compared to last year.
The gold market is holding on to modest gains Friday morning but is seeing little movement in initial reaction to the latest U.S. housing data. February gold futures last trade at $1,556.80 announce, up 0.41% on the day.
Avery Shenfeld, senior economist at CIBC, said that although lower interest rates and mortgage rates is supporting the U.S. housing market, he was surprised with how much construction activity was seen in December.
“Housing has been building momentum in recent months on the back of lower mortgage rates, but nothing like this,” he said. “We suspect that milder than usual weather in parts of the country normally more wintery in December was behind the monthly spike.”
However, Shenfeld added that permiting data shows a much more modest rise in construction through 2020.
“Q1 should benefit nicely from a climb in residential construction spending, helping to offset some of the drag expected from aircraft manufacturing issues,” he said.