Gold price remains down but largely ignores 12% jump in U.S. housing construction data
(Kitco News) - The gold market remains under pressure, trading below a critical support level but is not seeing any new major selling momentum following mixed activity in the U.S. housing market.
Housing starts rose 12.2 to a seasonally adjusted annual rate of 1.575 million units last month, the Commerce Department said on Tuesday. At the same time, data for July was revised lower to a rate of 1.404 million units from the previously reported 1.45 million units.
For the year, home construction is down 0.1%, the report said.
The gold market has seen renewed selling pressure since last week, with prices dropping below important long-term support at $1,675 an ounce and is seeing no significant bullish momentum. December gold futures last traded at $1,674.60 an ounce, down 0.21% on the day.
Meanwhile, leading data shows that the housing sector could continue to struggle through the end of the year. Permits for future homebuilding fell more than expected, dropping 10%% to a rate of 1.517 million units in August. Economists were expecting to see a rate of 1.60 million permits.
The report said the number of building permits issued last month is down 14.4% compared to August 2021.
The latest construction data could ease some fears that the U.S. is headed towards a sharp recession. The U.S. housing sector is an important pillar of support for the U.S. economy but has struggled as the Federal Reserve has aggressively raised the Fed Funds rate, pushing mortgage rates higher. At the same time, rising home prices have priced many potential new home buyers out of the market.
Katherine Judge, a senior economist at CIBC, said that despite the rebound in August, she is looking for further weakness in the housing sector.
"A cooling in building ahead would be consistent with the further deterioration in homebuilder confidence seen in September, and the continued climb in mortgage rates," she said.