(Kitco News) - The gold market is trading near session lows and below initial support at $1,650 an ounce; the precious metal is also being weighed down by relatively in-line housing construction data.
Housing starts fell 8.1% to a seasonally adjusted annual rate of 1.44 million units last month, the Commerce Department said on Wednesday. At the same time, data for August was revised lower to rate of 1.566 million units from the previously reported 1.58 million units.
However, the drop in home construction was relatively in line with consensus forecasts.
For the year housing construction is down 7.7%, the report said.
The gold market is not seeing much reaction to the latest economic data as it sees solid technical selling pressure. December gold futures last traded at $1,638.40 an ounce, down 1% on the day.
Economists note that the U.S. housing sector continues to struggle as rising interest rates drive mortgage rates to their highest level in 20 years. Along with rising mortgages, many consumers are being priced out of the market as prices remain stubbornly high.
However, some economists note that the latest economic data could indicate that the construction sector is close to bottoming. The latest construction data highlighted a stronger-than-expected rise in building permits.
Permits for future homebuilding rose to 1.56 million, up 1.4% from August’s revised rate of 1.542 million. Economists were expecting to see a drop to 1.52 million permits.
The number of permits issued in the last 12 months is down 3.2%, the report added.
Katherine Judge, senior economist at CIBC said that said that weakness in the U.S. housing sector will continue to drag down economic activity through year end.
“The retreat in starts over the third quarter, along with weakness in existing home sales, suggests that residential investment was a drag on growth. Looking ahead, housing market activity will remain under pressure as mortgage rates remain elevated,” she said.
