Gold Rises After Drop in US Home Sales

Gold prices have managed to find some traction Thursday, following data that point to weaker U.S. home sales in the next few months.

Thursday, the National Association of Realtors (NAR) said that its pending home sales index fell 2.4% in August to a reading of 108.5, compared to July’s downwardly revised level of 111.2. The drop was much larger than expected as economist expectations as consensus forecasts were calling for a fall of 0.1%.

According to reports, this is the second lowest reading for the year and the index is down 0.2% compared to last year.

“In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings,” said Lawrence Yun, NAR’s chief economist in the report.

Ahead of the report gold was trading in negative territory, reacting to better than expected gross domestic product data for the second quarter. However since the housing data prices have jumped into the green; December gold futures last traded at $1,324.50 an ounce, up 0.06% on the day.

Economists closely watch the pending home sales numbers because the index is seen as a barometer for the housing market. A lag of a month or two usually exists between a contract and a completed sale.

Gold prices push into positive territory following 2.4% drop in August pending home sales. December gold last traded at $1,323.80 an ounce.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza