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Gold price jumps after U.S. weekly jobless claims rise to 6.6 million

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(Kitco News) - The gold market continues to make further gains as the U.S. labor market continues to deteriorate as weekly jobless claims see another 3 million-claim rise.

First-time U.S. jobless claims skyrocketed during the week to Saturday to a record seasonally adjusted 6.64 million, up 3,341,000 from the previous week's revised level of 3.307 million.

“This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series,” the report said.

The new recordrise come after last week’s historic report, as claims rose above 3 million. According to consensus forecasts, economists were expecting to see jobless claims rise to 3.5 million

Gold prices are pushing higher following the record rise in jobless claims. June gold futures last traded at $1,626 an ounce, up more than 2% on the day.

Andrew Grantham, senior economist at CIBC said that markets might not be completely prepared for the latest employment data.

“While markets would have been prepared for a bad print in today's claims figures, the sticker shock of just how bad it was could still see some modest market reaction,” he said. “These data certainly suggest that the unemployment rate will peak higher than we previously assumed in the near-term, with a rise above 10% now likely in the coming months.”

"The weekly claims report further confirms U.S. economy has been severely crippled by the coronavirus outbreak," said Jim Wyckoff, senior technical analyst at Kitco.com

The rise in weekly claims continues to be the result of slowing business as the country tries to curtail the COVID-19 outbreak. The U.S. has become the new epicenter for the global pandemic as the number of infected have surpassed 200,000. States and cities have implemented lock down measures, asking people to stay at home as much as possible.

Meanwhile, the four-week moving average for new claims – often viewed as a more reliable measure of the labor market since it smooths out week-to-week volatility – was jumped by 1,607,750 to 2,612,000.

Continuing jobless claims, the number of people already receiving benefits and reported with a one-week delay, increased by 1,245,000 to a seasonally adjusted 3,029,000during the week ending March 21, the government said.

“This is the highest level for insured unemployment since July 6, 2013 when it was 3,079,000,” the report said.

Grantham added that the number of people applying for unemployment insurance is about 4% of previously employed population, adding to the 2% from last week’s data.

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