Gold prices struggling as U.S. pending home sales rise 2.2% in November
NEW YORK (December 31) The gold market is struggling to hold support at $2,600 an ounce and could face increased selling pressure as the U.S. housing market shows further signs of stabilizing as more consumers start the process of buying a new home, according to the latest data from the National Association of Realtors (NAR).
The U.S. pending home sales index rose 2.2% in November, the NAR announced on Monday, after October’s 1.8% increase. The data was significantly better than forecasts, as economists expected a 0.9% increase. According to the report, contract signings grew in all four U.S. regions in the last 12 months, with the West showing the biggest jump.
For the year, pending home sales are up 6.9%.
The gold market is not seeing a significant reaction to the latest economic data; however, according to some analysts, it could add to the selling pressure as the market struggles on its back foot near a critical support level. Spot gold last traded at $2,605.70 an ounce, down 0.56% on the day.
The rise in transactions comes as mortgage rates remain fairly elevated. However, NAR Chief Economist Lawrence Yun said that potential buyers are now getting comfortable with the market.
““Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” said Yun said in the report. “Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”
The housing market has struggled through 2024 as it dealt with two major headwinds. The Federal Reserve has maintained elevated interest rates through the first half of the year, driving 10-year bond yields higher. Consumers should not expect to see significantly lower rates next year, as the U.S. central bank expects to cut rates only twice in 2025.
At the same time, consumers continue to face high housing prices because of low levels of inventories.
KitcoNews
