(Kitco News) – The gold market is holding near session highs above critical resistance but is mostly ignoring mixed U.S. housing construction data.
The Commerce Department’s latest economic data showed that U.S. housing starts rose 9.2% in to a seasonally adjusted annual rate of 1.1.282 million units in August, up from July’s revised rate of 1.174 million. Consensus forecasts compiled by most news organizations called for starts to be around 1.24 million.
For the year, housing construction is up more than 9%, compared to activity in 2017.
Meanwhile, the Commerce Department said the tally of building permits – important as an indicator of future construction activity – fell by 5.7% last month to an annualized rate of 1.229 million, down from July’s revised rate of 1.303 million. Economists were expecting to see an increase to 1.31 million permits.
For the year building permits are down 5.5% from August 2017.
The gold market has not been reacting much to any economic data as it continue to follow the U.S. dollar. The yellow metal is holding on to recent gains but is unchanged in initial reaction to the latest housing data; December gold futures last traded at $1,209.60 an ounce up 0.57% on the day.
Katherine Judge, senior economist at CIBC World Markets said that the latest data could indicator a peak in construction in the housing data, even if there is still some short-term momentum still in the pipeline.
“Housing starts have not displayed any upward momentum since the start of the year, a sign that homebuilding either has peaked or is very close to its peak, she said. “Overall, while housing market activity is poised to moderate in the medium term as household formation slows and higher interest rates start to erode affordability, demand in the near term should remain fairly solid, helped by rising wages.”
By Neils Christensen
For Kitco News