(Kitco News) - The gold market continues to struggle as it faces a wave of selling pressure and better-than-expected labor market data.
The number of Americans filing new claims for unemployment benefits fell last week, pointing to a relatively stable labor market.
Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 215,000 for the week ended May 18, the Labor Department said on Thursday. According to consensus estimates, economists forecasted a more elevated reading of 220,000 claims.
The gold market is not reacting much to the positive labor market data. It is seeing solid selling pressure in reaction to the hawkish sentiment reflected in the Federal Reserve’s monetary policy meeting minutes.
June gold futures last traded at $2,368.10 an ounce, down 1.03% on the day. Analysts have said that traders need to keep an eye on near-term support at $2,350 an ounce.
Meanwhile, the four-week moving average for new claims – often viewed as a more reliable measure of the labor market since it flattens week-to-week volatility – rose to 219,750, an increase of 1,750 claims from the previous week's revised average of 218,000.
Continuing jobless claims, which represent the number of people already receiving benefits, were at 1.794 million during the week ending May 11, unchanged from the previous week’s revised data.
Markets are paying close attention to the labor market, which remains a critical factor for the Federal Reserve’s monetary policy. Economists note that a tight labor market will drive wage inflation higher, which will add to broadly higher consumer prices.
The Federal Reserve is already showing renewed concern regarding the persistent inflation threat. In Wednesday’s minutes, members of the FOMC said that it was taking longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2%.
The minutes also showed that some members of the Federal Reserve said that if inflation pressures increase, the central bank could be forced to raise interest rates again.
