(Kitco News) - Gold is holding critical near-term support at $2,900 an ounce, and some analysts expect the precious metal to attract safe-haven demand as U.S. new home sales fell sharply in January.
New home sales dropped more than 10% last month, coming in at a seasonally adjusted annualized rate of 657,000 homes, down from December’s revised sales rate of 734,000, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported on Wednesday.
For the year, new home sales are down 1.1%, the report said.
The gold market is not seeing any major movement in its initial reaction to the disappointing housing sales data. Spot gold last traded at $2,900.50 an ounce, down 0.47% on the day.
Gold is experiencing some profit-taking after hitting a fresh all-time high above $2,950 an ounce at the start of the week. However, analysts note that the precious metal remains well supported as consumers grow increasingly concerned about the health of the U.S. economy and rising inflation pressures.
Although the Federal Reserve cut interest rates aggressively in the final months of 2024, interest rates and mortgage costs have remained elevated. At the same time, low housing supply has kept prices high. These two headwinds are pricing many new consumers out of the housing market.
The report noted that the inventory of new houses for sale at the end of January was 495,000, representing a 9.0-month supply at the current sales rate.
Regarding home prices, the report stated that the median sales price of new houses sold in January was $446,300, while the average sales price was $510,000.
Some economists expect housing prices to rise this year as the cost of raw materials increases. Market analysts warn that commodity prices for products like lumber and copper could climb as President Donald Trump’s global trade policies, including tariffs and his "America First" approach, fuel market uncertainty.
