Gold prices fall on strong dollar, U.S. housing data ahead of Fed Powell’s testimony

See: U.S. housing starts surge as builders rev up single-family home construction in May, while a housing shortage drags on 

Construction on new American homes jumped 21.7% in May, rising to a 1.63 million annual pace last month from 1.34 million in April, the government said Tuesday. Economists surveyed by Dow Jones were expecting 1.39 million housing starts last month. Building permits, a sign of future construction, rose 5.2% to a 1.49 million rate, compared to Wall Street’s estimate of 1.42 million.

The housing data suggested the economy remained healthy and the Federal Reserve was likely to raise its benchmark interest rate again in July.

U.S. dollar inched up against a batch of other major currencies as investors continued weighing the U.S. interest-rate outlook. The ICE U.S. Dollar index
DXY,
-0.01%
traded less than 0.1% higher, at 102.57 Tuesday afternoon.

Federal Reserve Chairman Jerome Powell will appear before both House and Senate committees starting from Wednesday to offer his twice-yearly report on monetary policy and the economy to the House Financial Services Committee then reprise his remarks to the Senate Banking Committee on Thursday.

See: ‘Confused’ markets get another chance to hear Fed’s Powell ‘flesh things out’ on 2023 rate path

Gold retreated modestly last week after the Federal Reserve held its policy interest rate steady but signaled further hikes to come. However, the overall hit to the yellow metal following the Fed meeting was relatively contained despite the threat of further rate increases, said Thu Lan Nguyen, commodity analyst at Commerzbank, in a note.

“Probably this is partly because the market was anticipating further rate increases in any case, and partly because the extent to which monetary policy is set to be further tightened is not excessive,” Nguyen wrote.