New Record High in Gold at $2,500 As US Housing Suffers

After surpassing July’s peak of $2,483.74, gold (XAU/USD) surged to a new all-time high of $2,500 on Friday. This increase was driven by a weakening US Dollar, as well as a decline in U.S. housing starts and building permits, coupled with rising expectations that the Federal Reserve may lower interest rates, which would further support gold prices.

Gold buyers succeeded to place a new record high this week

Gold continues to be bought on every dip, signaling strong buyer control and suggesting that Friday’s breakout may continue. A key driver behind the rising gold prices is the growing global demand for the metal. In India, physical gold purchases have seen a slight uptick due to price corrections, while increasing premiums in China highlight the growing demand for gold as a safe-haven asset.

Gold Chart Daily – The Trend Has Slowed but Remains Bullish

Additionally, U.S. economic data reflects ongoing uncertainty, particularly in sectors like housing, which continues to weaken under the pressure of elevated Federal Reserve rates, keeping mortgage rates high. Earlier today, both July housing starts and building permits reported declines, reinforcing concerns about economic stability.

The U.S. CPI consumer inflation rate dropped below 3% last month, raising market expectations for the Federal Reserve to cut interest rates in next month’s meeting. The housing market is also facing increasing challenges, and Fed Fund Futures are now pricing in a notable 100 basis points of rate cuts by the end of 2024. As a result, the record high was surpassed on Friday, with the new record high at $2,509.70.

US Housing Starts and Building Permits for July

Housing Starts:
- Total: 1.238 million (below the 1.330 million expected)
- Prior: 1.353 million
- Change: -6.8% (compared to +3.0% in the previous month)
Building Permits:
- Total: 1.396 million (below the 1.429 million expected)
- Change: -4.0% (compared to +3.9% in the prior month)

The U.S. housing market showed signs of weakening in July, as both housing starts and building permits came in below expectations. Housing starts fell to 1.238 million, a 6.8% decline from the previous month, marking a significant drop from the 3.0% increase seen in June. Similarly, building permits decreased to 1.396 million, down 4.0% from the prior month. These declines suggest that the housing sector is under pressure, likely due to the impact of elevated interest rates and economic uncertainty.