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Gold price holding on to gains following 3.9% rise in U.S. housing starts

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(Kitco News) - The gold market is holding on to gains and just down from session highs even as construction in the U.S. housing sector picked up in August.

Housing starts increased 3.9% to a seasonally adjusted annual rate of 1.615 million units last month, the Commerce Department said on Thursday. According to consensus estimates, economists were expecting to see the pace of construction remain unchanged at 1.55 million units.

Annually, housing construction is up more than 17%, the report said.

The gold market is not seeing much reaction to the latest economic data; however, prices have fallen from their session highs. December gold futures last traded at $1,772 an ounce, up 0.46% on the day.

Economists have been paying close attention to the housing sector because it has been an important a pillar of strength as the economy continues to feel the impact of the the COVID-19 pandemic. Although the pace of construction has slowed since its highs in April, the sector remains resilient.

Economists note that a rise in building permits points to further growth in the housing sector. The report said that building permits data, which is a precursor to future projects, was up 6% at 1.728 million in August. For the year, building permits jumped more than 13% from the August 2020 levels.

“We expect housing starts to remain around current levels in 2022, as the drop in rates has worked to support home purchase intentions, and demand should also be supported by solid household formations,” said Katherine Judge, senior economist at CIBC.

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