(Kitco News)— The gold market is seeing some significant selling pressure, and further weakness in the labor market is not providing any bullish momentum, as more American workers than expected have applied for first-time unemployment benefits.
Initial claims for state unemployment benefits jumped by 18,000 to a seasonally adjusted level of 241,000 for the week ending April 26, the Labor Department announced on Thursday. The number missed economists’ expectations, as consensus forecasts had looked for a roughly unchanged reading. Meanwhile, the previous week’s figure was revised up to 223,000 claims.
While gold managed to push back above $3,300 an ounce on Wednesday following disappointing economic data, sentiment shifted sharply overnight. Continuous profit-taking overnight pushed gold prices to $3,200 an ounce. Disappointing economic data have had little impact on prices as they continue to struggle. Spot gold last traded at $3,223.50 an ounce, down 2% on the day.
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 226,000, increasing by 5,500 from last week’s revised average.
The report also showed that laid-off workers continue to find it challenging to get back into the labor market. Continuing jobless claims, which represent the number of people already receiving benefits, rose to 1.916 million, jumping by 83,000 claims from last week’s revised level.
“This is the highest level for insured unemployment since November 13, 2021, when it was 1,970,000,” the report said.
The disappointing weekly jobless claims are just the latest in a series of uninspiring employment data released this week. On Tuesday, US data showed a sharp drop in open job positions in March. On Wednesday, payrolls processor ADP said that the private sector created only 62,000 jobs in April, significantly missing expectations.
According to some analysts, the weak labor market data could provide new momentum for gold, as it could force the Federal Reserve to cut interest rates even as inflation pressures remain elevated.
Federal Reserve Chair Jerome Powell has said that the central bank would not be in a hurry to cut interest rates, as the labor market remains relatively healthy and inflation risks remain elevated.
