Gold Prices Remain Below Critical Support Following Mixed U.S. Construction Data
(Kitco News)- Goldprices remain under pressure and below critical support, following the releaseof mixed U.S. housing construction data.
TheCommerce Department's latest report showed that U.S. housing starts rose 5% into a seasonally adjusted annual rate of 1.35 million units in May, compared toApril's revised figure of 1.286 million starts. Consensus forecasts compiled by most news organizations called for starts to be around 1.31 million.
Meanwhile,the Commerce Department said the tally of building permits - important as an indicator of future construction activity - fell by 4.6% lastmonth to an annualized rate of 1.301 million. Economists were expecting tosee an increase to 1.35 million.
The gold market appears to be ignoring U.S.economic data as it is dragged lower by a stronger U.S. dollar. August goldfutures last traded at $1,276.10 an ounce, down 0.31% on the day.
While future growth in the housing sectorappears to be losing momentum, Royce Mendes, senior economist at CIBC WorldMarkets, said that they expect the trend to reverse later in the year.
“Theonly fly in the ointment today was the larger-than-expected slowdown inbuilding permits which cooled to a pace of 1301K from 1364K in April.Nevertheless, despite rising interest rates and higher lumber prices, wecontinue to see strong demand for housing in the US,” he said. “A nascentpickup in the homeownership rate resulting from higher incomes combined withtight inventories should work to support homebuilding over the remainder of theyear. All told, another positive reading for Q2 GDP tracking, which is oncourse to see an advance of roughly 4%.”
By Neils ChristensenFor Kitco News
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