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James Hyerczyk
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Comex Gold

Gold futures hit their highest level in seven weeks on Friday, while posting their best weekly performance since mid-December. The catalysts behind the move were a sharp retreat by U.S. Treasury yields on Thursday and a generally softer U.S. Dollar which drove up demand for dollar-denominated gold.

Gold’s advance came despite robust U.S. retail sales data and a significant drop in weekly jobless claims on Thursday. The price action suggests investors have bought into the Federal Reserve’s call for a surge in economic growth, while holding interest rates at historically low levels until the economy is on solid ground.

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On Friday, June Comex gold futures settled at $1780.20, up $13.40 or +0.76%.

In other news, the U.S. released reports on Building Permits, Housing Starts, Preliminary University Consumer Sentiment and Preliminary University of Michigan Inflation Expectations

US Housing Starts Near 15-year High; Consumer Sentiment Rises Moderately

U.S. homebuilding surged to nearly a 15-year high in March, but soaring lumber prices amid supply constraints could limit builders’ capacity to boost production and ease a shortage of homes that is threatening to slow housing market momentum, Reuters reported.

The sharp rebound reported by the Commerce Department on Friday added to robust retail sales in March in suggesting that the economy was roaring after a brief weather-related setback in February. Increasing COVID-19 vaccinations, warmer weather and massive fiscal stimulus are driving the economy, with growth this year expected to be the strongest in nearly four decades.

But caution is starting to creep in among consumers as the course of the pandemic remains uncertain and inflation is showing signs of heating up. Other data on Friday showed consumer sentiment rose moderately in early April.

Housing starts surged 19.4% to a seasonally adjusted annual rate of 1.739 million units last month, the highest level since June 2006. Economists polled by Reuters had forecast starts would rise to a rate of 1.613 million units in March.

Permits for future home building rose 2.7% to a rate of 1.766 million units last month, recouping only a fraction of February’s 8.8% plunge. They jumped 30.2% compared to March 2020.

Inflation concerns were on consumers’ minds early this month. A separate report from the University of Michigan on Friday showed its preliminary consumer sentiment index rose to 86.5 from a final reading of 84.9 in March. Economists had forecast the index would rise to 89.6.

Finally, the survey’s one-year inflation expectation jumped to 3.7%, the highest level in nearly a decade, from 3.1% in March. Its five-year inflation outlook was unchanged at 2.7%.

For a look at all of today’s economic events, check out our economic calendar.
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