The gold market is facing challenges in gaining bullish momentum, while the U.S. housing sector grapples with stabilization efforts amidst weak construction activity that threatens economic growth.
April saw a 5.7% increase in housing starts, reaching a seasonally adjusted annual rate of 1.36 million units, according to the Commerce Department’s recent report. However, this figure fell short of economists’ expectations of 1.42 million units, indicating a lower-than-anticipated growth trajectory. Despite this monthly uptick, housing construction remains 0.6% lower compared to the previous year.
Despite these developments, the gold market hasn’t shown significant reaction to the latest housing data. Investors are opting to secure profits following price resistance just below $2,400 per ounce, with June gold futures closing at $2,387.70, marking a 0.30% decline for the day.
The decline in building permits issued last month suggests a prolonged recovery may be elusive for the housing market. Building permits for future home construction decreased by 3.0% to a rate of 1.44 million, compared to March’s revised estimate of 1.485 million permits. This decline contrasts with economists’ expectations, who foresaw permits remaining relatively stable around 1.48 million.
The housing sector’s challenges stem from years of Federal Reserve interest rate hikes and limited inventories, resulting in elevated home prices for potential buyers. Economists argue that boosting construction pace is crucial for inventory growth and price stabilization.
