Harmovest Capital | Will Stronger Housing Data Push Gold Even Lower?

10/06/2026 | Market Focus

Key Highlights

• U.S. May Home Sales Recorded Strong Growth

• Downside Momentum in the U.S. Dollar Index Remains Limited

• Gold Continues to Trade in a Weak Downtrend

Market Review

U.S. May Home Sales Post the Strongest Increase of the Year

According to data released by the National Association of Realtors (NAR), existing home sales in May increased by 3.2% month-on-month, reaching a seasonally adjusted annual rate of 4.17 million units. This marks the largest increase recorded in 2026 and significantly exceeded market expectations of 0.7%.

The stronger-than-expected performance suggests that the U.S. housing market may be showing signs of recovery after a sluggish start to the year, particularly during the important spring selling season.

May Existing Home Sales

Month-on-Month Growth

+3.2%

Annualized Sales Rate

4.17 Million Units

Market Expectation

+0.7%

Key Factors Supporting the Increase

1. Lower Mortgage Rates

A decline in mortgage rates during April improved housing affordability and encouraged buyer activity.

2. Higher Inventory Levels

An increase in available housing inventory provided buyers with more choices in the market.

3. Rising Household Income

Improving household income also contributed to stronger housing demand.

NAR Chief Economist Lawrence Yun stated that if mortgage rates were to move closer to 6%, the housing market could potentially emerge from the weakness experienced over the past three years. However, he also noted that labor market imbalances, economic uncertainty, and elevated home prices continue to weigh on buyer confidence and overall housing activity.

Market Impact

U.S. Dollar Index (DXY)

The stronger housing data reduced market expectations for future Federal Reserve rate cuts, providing continued support for the U.S. Dollar.

Gold

Gold remains under pressure as a stronger U.S. Dollar and improving risk sentiment reduce demand for safe-haven assets.

U.S. Equities (S&P 500)

Improving economic data has provided some support to equity market sentiment, although expectations of higher interest rates could limit further upside potential.

Today's Key Events

U.S. Consumer Price Index (CPI)

Market participants expect inflation data to potentially come in above forecasts, driven by Middle East geopolitical tensions and elevated energy prices.

A stronger-than-expected CPI reading would likely reinforce expectations that the Federal Reserve will maintain higher interest rates for longer, supporting the U.S. Dollar while placing additional pressure on Gold and equity markets.

Bank of Canada Interest Rate Decision

Investors will closely monitor the Bank of Canada's assessment of economic growth and inflation, as well as any guidance regarding future monetary policy.

Market Sentiment Analysis

Fear & Greed Index

54 (Risk-On Sentiment)

The index has risen significantly from the previous reading of 36, indicating that investor confidence is improving and safe-haven demand is gradually easing.

As markets continue to digest the impact of the Iran-related geopolitical developments, capital has begun rotating from defensive assets into risk assets. Equity indices and cryptocurrencies have shown relative strength, while the U.S. Dollar continues to trade near elevated levels.

Technical Analysis: XAUUSD

Gold Remains in a Weak Technical Structure

From a technical perspective, Gold has broken below the key EMA89 and EMA144 support zones and has formed a bearish N-shaped continuation pattern, suggesting that downside momentum is strengthening.

Key Technical Signals

• Breakdown below EMA89 and EMA144 support levels

• Formation of a bearish N-shaped pattern

• Downtrend structure becoming increasingly established

Technical Outlook

Unless Gold can reclaim and sustain trading above the EMA89 and EMA144 resistance area, further downside risks remain.

The current technical structure favors a bearish outlook, with sell-on-rally opportunities remaining the preferred strategy while maintaining disciplined risk management.