(Kitco News) - Gold prices are holding firm above $3,400 an ounce as fresh signs of weakness in the U.S. housing sector highlight safe-haven demand for the precious metal.
The National Association of Realtors (NAR) reported Tuesday that its Pending Home Sales Index fell 0.4% in July, following a 0.8% decline in June. The data met economists’ expectations and marked a 0.7% drop compared to a year ago.
NAR Chief Economist Lawrence Yun said that while market conditions are showing modest signs of improvement, home buyers remain cautious.
“Even with modest improvements in mortgage rates, housing affordability, and inventory, buyers still remain hesitant," Yun said. "Buying a home is often the most expensive purchase people will make in their lives… people take their time to ensure the timing and home are right for them."
Despite the disappointing data, gold saw little immediate reaction. Spot gold last traded at $3,406.50 an ounce, up 0.32% on the day.
Economists track pending home sales closely, as the report serves as a leading indicator of existing home sales, reflecting contracts signed weeks or months before closings.
The U.S. housing market has struggled for two years under the weight of elevated mortgage rates and rising home prices, leaving many potential buyers priced out. However, analysts expect conditions to improve as the Federal Reserve signals the start of an interest rate-cutting cycle.
According to the CME FedWatch Tool, markets are pricing in an 87% chance of a rate cut in September, with the possibility of two more by year-end.
“The Federal Reserve signaling that they may enact a lower interest rate policy should steadily enlarge the pool of eligible home buyers in the upcoming months,” Yun said.
