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Gold price holds above $1,850 as U.S. existing home sales see record recovery but fall short of expectations

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(Kitco News) Gold prices edged down slightly but held just above $1,850 an ounce level as U.S. existing home sales saw a record recovery in June but fell short of market expectations.

Existing home sales rose 20.7% last month to a seasonally adjusted and annualized rate of 4.72 million units, compared to May’s annualized rate of 3.91 million homes, the National Association of Realtors (NAR) said on Wednesday. The advance comes following a drop of 9.7% in May. Economists were expecting to see an increase of 24.5% to 4.78 million units in June.

Gold prices edged down after the release but remained near nine-year highs. August Comex gold futures were last trading at $1,851.90, up 0.43% on the day.

Despite coming in below market expectations, June saw a record-pace recovery, the NAR said. 

“Existing-home sales rebounded at a record pace in June, showing strong signs of a market turnaround after three straight months of sales declines caused by the ongoing pandemic,” the report said.

The recovery in the housing market looks to be sustainable, noted NAR’s chief economist Lawrence Yun.

“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” Yun said. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”

The median price for all home types was $295,300, up 3.5% from last year, marking the 100th straight month of annual gains. The total inventory was at 1.57 million units, up 1.3% from May and down 18.2% from last year’s total. 

“Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply,” Yun pointed out.

Existing home sales data is one of the most important releases this week because it gives investors an idea of whether the U.S. is seeing an actual recovery in house sales or whether people are simply re-financing their mortgages to reflect lower rates, said TD Securities head of global strategy Bart Melek.

“A good number would be a confirmation that the housing market is doing okay as we have been noticing a lot of new mortgage applications,” he said last week.

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