(Kitco News) - The gold market is off its lows but faces some difficult headwinds as The U.S. labor market remains relatively healthy, with the number of workers applying for first-time unemployment benefits falling more than expected.
Thursday, the U.S. Labor Department said that weekly jobless claims dropped by 12,000 to 201,000 during the week ending Feb 17, up from the previous week's revised estimate of 212,000 claims.
The number was lower than the consensus forecast, as economists were expecting to see jobless claims rise to 217,000.
The gold market continues to consolidate above $2,000 an ounce, seeing a muted reaction to the latest employment data. April gold futures last traded at $2,037.60 an ounce, up 0.16% on the day.
The report also noted that some unemployed workers have found new jobs and reentered the labor market.
Continuing jobless claims, which represent the number of people already receiving benefits, fell to 1.862 million during the week ending Feb 10, down by 27,000 claims above the previous week's revised level of 1.889 million.
Markets continue to keep a close eye on the labor market as it remains an important factor driving the Federal Reserve’s monetary policy. The central bank has said that it would like to see some slack in the labor market to feel confident that inflation is falling back to its 2% target.
According to some commodity analysts, gold could remain range-bound as the healthy labor market forces the Federal Reserve to maintain its aggressive monetary policy longer than anticipated.
However, a selloff in gold is unlikely as the central bank continues to lay the groundwork for an eventual rate cut this year.
Wednesday, in the minutes of the Federal Reserve’s January monetary policy meeting, the central bank noted that although the labor market remains healthy, momentum is starting to slow.
“While labor market conditions were generally seen as strong, several participants noted that recent job gains were concentrated in a few sectors, which, in their view, pointed to downside risks to the outlook for employment,” the minutes said.
