(Kitco News) - The gold market is once again seeing renewed profit-taking, and the precious metal could continue to struggle as the U.S. labor market shows resilience, with the number of American workers applying for first-time unemployment benefits dropping below 200,000.
Initial claims for state unemployment benefits fell by 9,000 to a seasonally adjusted 198,000 for the week ended Jan. 10, the Labor Department said Thursday. The data significantly beat expectations; according to consensus estimates, economists had forecast a rise to 215,000 claims. The previous week’s claims were revised slightly lower to 207,000.
This marks only the second time in the past 12 months that jobless claims have fallen below 200,000.
The gold market is not seeing any significant reaction to the positive labor market data, though some profit-taking has emerged. Spot gold last traded at $4,589.90 an ounce, down 0.78% on the day.
Although most analysts remain bullish on gold, as the market maintains its long-term uptrend, some have noted that volatility could increase in the near term as markets attempt to determine the path of U.S. monetary policy through 2026.
Analysts have said the Federal Reserve will need to see further weakness in the labor market before making additional interest rate cuts.
“The stronger labour signal reduces the urgency for aggressive Federal Reserve rate cuts, supporting a firmer US dollar and higher Treasury yields, which together erode gold's appeal as a non-yielding safe-haven asset. While geopolitical risks (Iran tensions, Fed scrutiny) and broader uncertainty provide underlying bid, today's claims print tilts the balance toward consolidation or modest pullback in gold prices unless offset by fresh haven flows,” said Aaron Hill, Chief Market Analyst at FP Markets
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 – dropped to 205,000, down 6,500 claims from the previous week's revised average of 211,500.
At the same time, laid-off workers are finding it easier to re-enter the labor market. Continuing jobless claims dropped to 1.884 million, a drop of 19,000 from the previous week’s revised level
The advance number for seasonally adjusted insured unemployment during the week ending January 3 was 1,884,000, a decrease of 19,000 from the previous week's revised level of 1.914 million.
At the same time, laid-off workers are finding it easier to re-enter the labor market. Continuing jobless claims fell by 19,000 to 1.884 million for the week ending Jan. 3.
