Gold Drops To Session Lows As U.S. Pending Home Sales Spike 8.3% In December

(January 26,2024-Kitco News)

Gold prices fell to session lows after the U.S. housing sector surprised to the upside last month, with far more consumers than expected beginning the process of buying.

U.S. pending home sales rose 8.3% for an index reading of 77.3 in December, following November’s revised decrease of 0.3%, the National Association of Realtors (NAR) said Thursday. The data was much stronger than expected, as the consensus forecast called for only a 1.5% increase in pending home sales transactions. In October, the index posted an initial reading of 71.4, the lowest since records began in 2001.

“The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices," said Lawrence Yun, NAR chief economist. "Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”

The report also noted that the index was up 1.3% compared to December 2022. The Pending Home Sales Index (PHSI) is a forward-looking indicator of home sales based on contract signings. An index of 100 is equal to the level of contract activity in 2001.

The gold market sold off sharply following the housing data publication on Thursday, falling to a daily low of $2,016.23 in the minutes following the 10 am EST release. Spot gold last traded at $2,018.75 an ounce, down 0.11% on the session.

The U.S. housing sector, which is a major contributor to the nation’s gross domestic product, has been a drag on growth through 2023 as the Federal Reserve has aggressively raised interest rates.

“Home sales are projected to rise significantly in each of the next two years as the market steadily returns to normal sales activity,” Yun added.