(Kitco News) - Gold prices continue to consolidate near their recent record highs, above $2,580 an ounce, even as the U.S. housing market experiences a robust increase in construction activity.
Housing starts jumped 9.6% to a seasonally adjusted annual rate of 1.356 million units, the Commerce Department reported on Wednesday. This data exceeded expectations, as economists had anticipated a smaller increase to 1.31 million units. At the same time, the July data was revised downward to a rate of 1.237 million units. Housing starts are up 3.9% from the levels reported in August 2023.
Construction activity in the U.S. housing sector has surged to its fastest pace since April. However, some analysts note that despite the growing momentum, it is still not sufficient to meet the increasing demand.
The report also indicated that building permits for future homebuilding rose 4.9% to a rate of 1.475 million last month, surpassing the consensus expectation of 1.41 million permits.
Annually, however, the pace of building permits issued is down 6.5%.
Despite the resilient housing data, which economists say will support economic activity in the second half of the year, gold prices have remained relatively unaffected. Prices have managed to hold above $2,560 an ounce. Spot gold was last traded at $2,573.90 an ounce, up 0.19% on the day.
Gold prices remain well-supported as markets anticipate the Federal Reserve will aggressively lower interest rates later in the day. According to the CME FedWatch Tool, markets see a 63% chance of a 50-basis-point rate cut.
However, many economists caution that market expectations are running too far ahead of the Fed. Some note that the housing data continues to show that the U.S. economy remains fairly resilient, despite a general slowdown.
The U.S. housing market has been under particular scrutiny in recent years, as the Federal Reserve’s tightening cycle has pushed mortgage rates to multi-decade highs. At the same time, a shortage of supply and new construction has driven home prices higher, making it difficult for many first-time homebuyers to enter the market.
