Gold prices holding above $1,950 as U.S. housing starts drop 11.3% in August
|Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!|
(Kitco News) - Technical momentum is supporting gold prices near a two-week high above $1950 an ounce as the precious metal sees little reaction to significantly disappointing housing construction data, highlighting ongoing weakness in the U.S. housing sector.
Housing starts dropped sharply by 11.3% to a seasonally adjusted annual rate of 1.283 million units last month, the Commerce Department said on Tuesday. The data came in weaker than expected as economists looked for a drop to 1.44 million units. At the same time, July's data was revised lower to a rate of 1.447 million units from the previously reported 1.45 million units.
For the year, housing construction is down more than 14% compared to activity in August 2022.
The gold market is seeing little reaction to the disappointing economic data as technical momentum keeps prices supported above a key psychological level. December gold futures last traded at $1,956.80 an ounce, up 0.17% on the day.
The U.S. housing sector remains a significantly weak pillar of the economy as persistently higher prices and elevated mortgage rates due to the Federal Reserves's aggressive tightening cycle has pushed many new home buyers out of the marketplace; however, there are some signs that the market is starting to stabilize at lower levels.
The report said that building permits for future homebuilding also rose more than expected, increasing 6.9% to a rate of 1.543 million in August. Economists expected to see a rate of 1.44 million permits, unchanged from last month.
However, the report noted that for the year, building permit issuances are down 2.7%.
The latest housing data comes as the Federal Reserve starts its two-day monetary policy meeting. Markets expect the U.S. central bank to keep interest rates unchanged. Still, it will maintain its tightening bias and signal that it is committed to keeping interest rates in restrictive territory to bring inflation down to the 2% target.
Many analysts have said that the elevated interest rates will keep home buyers out of the market. The U.S. housing sector significantly contributes to the nation's Gross Domestic Product.