(Kitco News) - Gold is facing some selling pressure but remains above $2,700 an ounce, even as the U.S. housing market shows signs of stabilizing with improved housing construction activity in December.
Housing starts jumped nearly 15% last month to a seasonally adjusted annual rate of 1.499 million units, up from November’s reading of 1.294 million units, the Commerce Department announced on Friday. The data significantly exceeded expectations, as economists had forecast a slight increase to 1.33 million units.
Despite the monthly increase, the report noted that housing activity is still down 4.4% compared to December 2023.
Better-than-expected construction data is adding pressure to gold, which is already experiencing some profit-taking after prices hit a two-month high on Thursday. Spot gold last traded at $2,705.90 an ounce, down 0.32% on the day.
Technical analysts will monitor whether the $2,700 level holds as support. This level has acted as solid resistance, with prices consolidating in a narrow range over the past three months.
While construction activity improved last month, economists are keen to see whether this momentum will persist, as permits for new construction declined slightly, in line with expectations.
The report indicated that building permits for future homebuilding fell 0.7% to a rate of 1.483 million, surpassing the consensus estimate of 1.46 million permits. For the year, permits are down 3.1%.
Economists are closely monitoring the U.S. housing sector due to its significant impact on GDP. The sector has struggled as consumers have been priced out of the market. Higher interest rates have pushed mortgage rates higher, while low inventories have kept prices elevated.
Some economists expect the housing market to continue facing challenges as the Federal Reserve looks to shorten its easing cycle through 2025. Markets are currently pricing in one 25-basis-point cut this year.
