The real estate market in the US continues to show moderate growth, which could be early signals of a slow recovery in this market.
According to the recent U.S. Census Bureau report regarding new residential construction statistics for June 2011:
The building permits for privately owned housing reached in June an annual rate of 624,000 – a 2.5% increase from May 2011.
Housing starts also inclined and reached a rate of 629,000 during June a 14.6% increase compared to 549,000 in May 2011, and 16.7% above the rate in June 2010.
These positive statistics of the real estate market in the US might be among the reasons for the drop in gold price yesterday:
According to Roache et. al (2008) there is a lagged by one day negative correlation between Housing starts and gold price; i.e. as the Housing starts annual rate rises, gold price falls the following day; following the report, gold and silver prices did decline yesterday; this shift in direction, might be stem, in part, by this recent housing market report.
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Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.