(Kitco News) - Some stability in the U.S. labor market, as the number of American workers applying for first-time unemployment benefits remains relatively unchanged for the fourth consecutive week, is doing little to derail renewed momentum in the gold market.
Initial claims for state unemployment benefits came in at a seasonally adjusted 206,000 for the week ending August 29, the Labor Department announced Thursday. The number was in line with expectations. The previous week’s figure was revised slightly higher to 204,000 claims, compared with the previously reported 203,000.
After a slow start to the week, bullish momentum has started to pick up in the gold market after two disappointing employment reports raised concerns about the health of the labor market. Spot gold last traded at $4,466.90 an ounce, up nearly 2% on the day.
Analysts are paying close attention to broader labor market data and have said that weak job growth could force the Federal Reserve to leave interest rates unchanged later this month. Gold prices have struggled in recent days after Federal Reserve Chair Kevin Warsh said in his speech at the Central Bank Symposium in Jackson Hole that inflation is a bigger concern than a cooling labor market.
Waleed Said, Technical Analyst at GivTrade, said that although the modest rise in jobless claims is not a recession alarm, it does reinforce concerns in a market already questioning how resilient U.S. growth remains.
“Gold pushing towards $4,475 shows investors are paying for protection ahead of tomorrow’s non-farm payrolls report, while US futures are holding up because traders still see room for rate relief if labour-market momentum cools further,” he said. “The strategy is not to chase today’s move blindly, but to stay positioned for volatility: labour-market weakness is becoming more valuable to markets than raw growth strength.”
Meanwhile, the four-week moving average for new claims—often viewed as a more reliable measure of the labor market because it smooths out week-to-week volatility—came in at 207,250, compared with the previous week’s revised average of 205,750.
Continuing jobless claims, which represent the number of people already receiving benefits, were at 1.779 million during the week ending August 22, up from the previous week’s revised level of 1.771 million.
