Gold Price Still Under Pressure Despite Weak U.S. New Home Sales

New York (Jun 23)  Gold prices remain under pressure despite weakness in the U.S. housing market as consumers bought fewer new homes last month, according to the latest data from the U.S. Commerce Department.

Thursday, the department said that sales of new single-family homes fell by 6% in May to a seasonally adjusted annualized rate of 551,000 homes, down from April’s revised sales rate of 507,000 units; the initial report pegged April's sales at 619,000 units. According to consensus forecasts, economists were expecting to see a modest fall to 561,000 units.

The gold market is relatively unchanged following the weaker-than expected data; August Comex gold futures last traded at $1,265.40 an ounce, down 4.60 on the day.

Although data was weaker on the month, sales are up 8.7% compared to May 2015 levels.

The report noted that the median price for new homes last month was $290,400 and the average price was 358,900. According to the data, as of the end of the month there was an estimated supply of 244,000 new homes available for sale, this represents a supply of 5.3 months.

Although the data was weaker an expected, Royce Mendes, senior economist at CIBC World Markets, said that the drop isn't surprising given April's massive gains.

"Looking ahead, we will expect that housing activity will move higher even though many of the indicators have been rangebound during the first half of the year," he said.

Source: KitcoNews