Gold struggles under $4,000 as housing recovery fails to lift sentiment

Gold prices remained below the $4,000-an-ounce mark on Friday, with the precious metal struggling to attract meaningful safe-haven demand despite persistent uncertainty in the US housing sector.

Although construction activity rebounded sharply in June after a weak performance in May, the broader housing market continued to show signs of weakness that could weigh on economic activity during the second half of the year.

Investors largely looked past the stronger housing data as broader macroeconomic concerns continued to dominate sentiment.

According to data released by the Commerce Department on Friday, housing starts climbed 19% in June to a seasonally adjusted annual rate of 1.427 million units, up from May's revised annual rate of 1.20 million units, which marked a six-year low.

The reading also came in above economists' expectations, pointing to a stronger-than-anticipated recovery in residential construction.

Despite the upbeat housing data, the gold market showed little immediate reaction.

Selling pressure persisted after the metal failed to hold above the psychologically important $4,000-an-ounce level, suggesting that investors remained focused on inflation risks and the broader interest rate outlook rather than signs of resilience in the housing market.

Gold heads for steepest weekly decline in six weeks

Earlier in the day, gold prices edged higher but remained on track for their steepest weekly decline in six weeks.

The inflationary impact of the renewed US-Iran conflict continued to outweigh support from softer US inflation data, limiting demand for the traditional safe-haven asset.

Spot bullion rose 0.5% to $3,988.20 an ounce after earlier touching its lowest level since July 1.

August gold futures were little changed near $3,992 an ounce, reflecting cautious trading ahead of the weekend.

Despite the modest intraday rebound, gold was still down about 3.2% for the week.

The decline highlighted how quickly investor sentiment shifted away from safe-haven buying and toward concerns surrounding higher oil prices, rising Treasury yields and expectations for the Federal Reserve's monetary policy path.

The recent price action also indicated that geopolitical uncertainty alone has not been sufficient to offset broader macroeconomic pressures facing the precious metals market.

Silver remains under pressure

Silver prices also stayed under pressure on Friday, with the metal trading below $56 per ounce and extending losses for a third consecutive session.

The metal was on track to post a weekly decline of more than 7% as escalating tensions in the Middle East pushed oil prices higher, fuelling concerns over inflation and the outlook for interest rates.

The silver price (XAG/USD) traded around $55.50 per troy ounce during Asian trading hours on Friday.

Investors continued to monitor rising energy costs and their potential impact on inflation expectations and central bank policy, keeping pressure on the industrial precious metal.

Both gold and silver remained under pressure as markets balanced persistent inflation concerns, higher energy prices, and interest rate expectations against lingering uncertainty in the US housing sector.