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Gold price unable to catch a bid as weekly jobless claims fall below 1 million

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(Kitco News) - The gold market is struggling to find momentum as less than a million people applied for weekly unemployment benefits in the U.S.

Thursday, the Labor Department said that 881 million Americans filed for first-time U.S. jobless claims in the week to Saturday, a decrease of 130,000 from the previous week's revised level. The previous week's level was revised up by 5,000 from 1,006,000 to 1,011,000.  

The drop in claims significantly beat consensus forecasts; economists were expecting to see claims of around 955,000. This is the lowest claims level since the U.S. economy and labor market were devastated by the COVID-19 pandemic.

The latest employment data is keeping a lid on gold prices as the market continues to see some strong technical selling pressure after testing resistance at $2,000 on Tuesday. December gold futures last traded at $1,942.10 an ounce, down -.18% on the day.

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 991,750, down 77,500 claims from the previous week.

Continuing jobless claims, the number of people already receiving benefits and reported with a one-week delay, fell to 13.254 million, for the week ending Aug. 22. Continuing claims dropped down 1.238 million from the previous week.

According to some economists, a revision in the Labor Department’s season adjustment could account for the better than expected employment data.

“The methodology used to seasonally adjust the national initial claims and continued claims reflects additive factors as opposed to multiplicative factors,” the department said.

“In times of relative economic stability, the multiplicative option is generally preferred over the additive option. However, in the presence of a large level shift in a time series, multiplicative seasonal adjustment factors can result in systematic over- or under-adjustment of the series; in such cases, additive seasonal adjustment factors are preferred since they tend to more accurately track seasonal fluctuations in the series and have smaller revisions,” the report added.

"The numbers are a little bit of apples and oranges from week to week,' siad Greg Michalowski, currency analyst at Forexlive.com.

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