(Kitco News) - Gold prices are holding near session highs and testing critical resistance just below $3,400 an ounce, as the U.S. labor market continues to lose momentum. The number of American workers applying for first-time unemployment benefits remains elevated.
Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 248,000 for the week ending June 7, the Labor Department announced on Thursday. The figure came in higher than expected, as consensus estimates had forecast 242,000 claims. The previous week’s number was revised up by 1,000 to 248,000.
Jobless claims remain at their highest level since early October.
Gold prices have been consolidating in a narrow range but continue to hold critical support above $3,300 an ounce. Analysts note that the weaker employment data is likely to continue supporting the precious metal. Spot gold last traded at $3,387.61 an ounce, up 1% on the day.
Although gold is showing renewed momentum, some analysts caution that the $3,400 level has become a key resistance point, especially as investors keep a close eye on April’s record high of $3,500 an ounce.
For some investors, ongoing weakness in the U.S. labor market is the primary driver behind higher gold prices. Many analysts suggest that gold may need a clear signal from the Federal Reserve indicating a readiness to cut interest rates again in order to break above current resistance.
The U.S. central bank has remained firm in its stance to maintain a neutral monetary policy, citing persistent inflation risks and a labor market that, while softening, is still relatively stable.
The four-week moving average for new claims—which is considered a more reliable indicator of labor market trends as it smooths out weekly volatility—rose to 240,250, up from the previous week’s revised average of 235,250.
“This is the highest level for this average since August 26, 2023, when it was 245,000,” the report said.
Adding to the gloomy labor outlook, unemployed workers are increasingly finding it difficult to reenter the job market.
Continuing jobless claims, which track the number of individuals already receiving benefits, rose to 1.956 million for the week ending May 31, up from the previous week’s revised level of 1.902 million.
“This is the highest level for insured unemployment since November 13, 2021, when it was 1,970,000,” the report said.
