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Gold prices get another boost as U.S. existing home sales disappoint in May

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(Kitco News) Gold prices saw more gains and traded near five-week highs after U.S. existing homes sales missed expectations in May.

Existing home sales tumbled 9.7% last month to a seasonally adjusted and annualized rate of 3.91 million units, compared to April’s annualized rate of 4.33 million homes, the National Association of Realtors (NAR) said on Monday. The drop comes following a plunge of 17.8% in April. Economists were expecting to see a decline of 3% to 4.12 million units in May.

Gold prices edged up after the data release with August Comex gold futures last trading at $1,778.80, up 1.47% on the day. 

Overnight, gold prices rallied and climbed to five-week highs on increased safe-haven demand triggered by a concerning rise of COVID-19 infections around the globe. 

“Traders and investors continue to weigh the positive aspect of economies continuing to come back to life and at a faster pace than most expected versus the negative aspect of a worrisome rise in Covid-19 cases worldwide, including in many states in the U.S. Importantly, the sense of the marketplace is that major central banks of the world will continue to print money if global economies show further signs of sputtering,” said Kitco’s senior market analyst Jim Wyckoff.

May’s drop marked the low point in sales, the NAR said, noting that it expects to see data begin to improve in the coming months.

“Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lockdown and hence the cyclical low point,” said NAR’s chief economist Lawrence Yun. “Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”

The median price for all home types was $282,600, up 2.3% from last year, marking the 99th straight month of annual gains.

The total inventory was at 1.55 million units, up 6.2% from April and down 18.8% from last year’s total. 

“New home construction needs to robustly ramp up in order to meet rising housing demand,” Yun said. “Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”

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