(Kitco News) - The gold market continues to gain strong momentum, with prices trading near session highs and reaching new record levels above $3,000 an ounce. This comes despite signs of stabilization in the U.S. housing sector, which has eased some recession fears and potentially reduced gold’s appeal as a safe-haven asset.
Housing starts surged more than 11% last month to a seasonally adjusted annual rate of 1.50 million units, up from January’s 1.35 million units, the Commerce Department announced on Tuesday. The data significantly exceeded expectations, as economists had forecast a slight increase to 1.38 million units.
However, the report also noted that annual housing construction was down 2.9% compared to February 2024.
The gold market has shown little reaction to the strong U.S. economic data, as technical momentum continues to push prices higher. Spot gold last traded at $3,028.20 an ounce, up nearly 1% on the day.
The report indicated that single-family home construction rose 11.4% in February to a rate of 1,108,000 units.
While construction activity in the U.S. housing sector improved last month, economists remain cautious about whether this momentum will continue, as permits for new construction were largely unchanged.
The report showed that building permits for future home construction fell 1.2% to a rate of 1.46 million, down from January’s revised rate of 1.47 million. However, the data was slightly better than expected, as economists had anticipated a decline to 1.45 million permits.
The housing sector has garnered significant attention in recent months as the U.S. economy slows, partly due to uncertainty surrounding former President Donald Trump’s tariffs on imports and the ongoing trade war.
Some market analysts suggest that the U.S. housing sector could play a crucial role in determining whether the economy avoids a recession. Meanwhile, some economists warn that higher lumber prices resulting from the trade war could pressure housing construction this year.
Housing construction slowed throughout 2024 as more consumers were priced out of the market due to elevated mortgage rates and rising home prices.
