US Housing starts and building permits rose in June

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.

Current gold price, short term futures (August 2011 delivery) is traded at $1,589.5 per t oz. a $11.6 decrease or 0.72%, as of 07:52*.

The current Dated Brent spot oil price inclines by $0.53/b to $117.90 / barrel as of 08:09*.

Euros to USD is currently traded up at 1.4184 a 0.2008% increase as of 08:02*.

(* GMT)

For more on this subject:

*This correlation is based on the research done by Roache et. al (2008) in the paper named “the effects of economic news on commodity prices: is gold just another commodity?”