Gold hits all-time high

Gold surged to a fresh all-time high, reflecting strong demand for safe-haven assets as investors reacted to a sharp decline in U.S. housing construction. The latest figures revealed a steeper-than-expected drop in housing starts, raising fears of a deeper slowdown in the broader economy.

Housing data disappoints

Data from the U.S. Commerce Department showed that housing starts fell 6.8% in July to a seasonally adjusted annual rate of 1.238 million units, missing analysts’ expectations of a smaller decline to 1.33 million units. The report also included a downward revision for June’s data, which now reflects a rate of 1.329 million units, down from an earlier estimate of 1.353 million units.

On an annual basis, housing starts have tumbled 16%, marking a significant contraction from the same period in 2023. The weaker-than-anticipated data is seen as a reflection of rising mortgage rates and affordability challenges, which continue to weigh heavily on the U.S. housing market.

RBA’s Bullock rules out near-term rate cuts

Reserve Bank of Australia (RBA) Governor Michele Bullock pushed back against market expectations of an imminent rate cut, emphasizing that inflation remains too high for policy easing to be considered.

Addressing the House of Representatives’ economics committee, Governor Bullock stated that while the RBA is closely monitoring economic conditions, the current monetary stance remains “sufficiently restrictive” to bring inflation down within a reasonable timeframe without causing undue harm to employment.

Despite financial markets pricing in a rate cut by the end of the year, Bullock called such expectations “premature,” pointing out that underlying inflation is not expected to return to the central bank’s target range until late 2025. She also noted that while economic conditions may shift, the current outlook suggests that rate cuts are not on the horizon in the near term.

“Inflation is still too high, and we believe the current policy settings are appropriate,” Bullock asserted. “Any discussion of rate cuts at this stage would be premature.”

The remarks solidified market sentiment that the RBA is likely to keep rates unchanged for the foreseeable future, prioritizing inflation control over growth concerns.

UK retail sales miss forecasts in July

UK retail sales volumes rose by 0.5% in July, slightly below expectations of a 0.6% increase, signaling a modest recovery in consumer spending despite inflationary pressures.

Sales volumes over the three months leading up to July climbed 1.1% compared to the previous quarter, indicating steady improvement in retail activity. However, the pace of growth fell short of market forecasts, highlighting the ongoing strain on consumer budgets amid rising interest rates and persistent inflation.