(Kitco News) -
The gold market is holding on to solid gains and pushes closer to $2,400 an ounce as the U.S. housing market continues to struggle as residential construction weakens more than expected in March.
Housing starts declined by 14.7% in March to a seasonally adjusted annual rate of 1.321 million units, the Commerce Department said on Tuesday. The data came in much lower than expected, as economists looked for a rate of 1.48 million units. At the same time, February’s data was revised upward to a rate of 1.55 million units from the previously reported 1.52 million units.
Housing construction is down 4.3% compared to activity in March 2023.
The gold market appears to be consolidating just below $2,400 an ounce as the disappointing economic data provides further upside support. June gold futures last traded at $2,391.20 an ounce, up 0.35% on the day.
At the same time, the report said that building permits for future homebuilding declined 4.3% to a rate of 1.458 million last month, which was also lower than the consensus expectation for a rise to 1.51 million permits. February’s print was unrevised at 1.549 million units. For the year, building permit issuances were still up 1.5% from last year.
The housing sector has struggled in recent years as the Federal Reserve as aggressively raised interest rates. Along with rising interest rates, potential home buyers have also faced higher prices due to low inventories.
Some economists have said that the pace of construction needs to improve for inventories to rise and prices to fall.
