Gold prices receive support from just released US economic data

Gold prices are trading at a high level after the latest data on US housing showed a mixed picture last month.

The US Commerce Department said Tuesday that the number of homes under construction fell 9.8% in January, to a seasonally adjusted rate of 1.366 million units/year. This data was worse than expected as economists expected a slight decrease of -9.0% to 1.400 million units. In December, this figure was 1.515 million units.

For the year, housing construction activities decreased by 0.7% compared to 1.376 million units in January 2024.

The report also shows that the number of construction permits - indicators for future house construction activities - increased by 0.1% to 1.483 million units in the previous month, higher than the forecast of 1.460 million units. The figure for December was 1.482 million units. Compared to the same period last year, the number of construction permits has decreased by 1.7% compared to 1.508 million units in January 2024.

According to Ernest Hoffman - market analyst of Kitco News, the gold market has increased after the housing data was released. The last spot gold price was recorded at 2,940.58 USD/ounce, up 0.18% on the day and not far from the highest in the session at 2,947.08 USD/ounce.

The US housing sector contributes significantly to the country's gross domestic product (GDP). This continues to be a major obstacle for the economy as housing prices are high along with mortgage rates increasing due to the strong tightening cycle of the US Federal Reserve (FED). This has caused many new home buyers to leave the market.

Jim Wyckoff - senior analyst at Kitco said that the price of gold futures for April is showing a strong upward trend in the short term, according to technical analysis on the chart. Buyers are aiming to push prices above $3,000/ounce. On the contrary, sellers want to pull the price down to below 2,850 USD/ounce.

For now, the first resistance that gold needs to overcome is 2,968.50 USD/ounce, followed by 2,985 USD/ounce. Meanwhile, if prices fall, the key support zone will be $2,925/ounce and then $2,900/ounce.

In addition, Jim Wyckoff also said that safe-haven purchases will continue to support the two precious metals this week.