(Kitco News) - The gold market is holding its ground even as it faces further headwinds from a relatively healthy labor market, with the number of American workers applying for first-time unemployment benefits remaining below a key level for the third consecutive month.
Initial claims for state unemployment benefits came in at a seasonally adjusted 197,000 for the week ending Sept. 26, the Labor Department announced Thursday. The number was slightly better than expectations. The previous week’s figure was revised slightly higher to 198,000 claims, compared with the previously reported 197,000.
Analysts note that a stable labor market gives the Federal Reserve room to raise interest rates at next week’s monetary policy meeting. Expectations for at least one more rate hike before the end of the year are supporting U.S. 10-year yields near 5.30%, their highest level in nearly 20 years.
Despite elevated opportunity costs, gold is not seeing any major reaction to the positive employment data. Spot gold last traded at $4,182.50 per ounce, up 0.65% on the day.
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 200,000, compared with the previous week’s revised average of 202,500.
The report also indicated that unemployed workers are finding new jobs. Continuing jobless claims, which represent the number of people already receiving benefits, came in at 1.701 million during the week ending Sept. 19, down from the previous week’s revised level of 1.712 million.
Artem Bakushev, Head of Risk at Monaxa, said that the latest weekly data will help to alleviate recession fears as the “labor market refuses to buckle.” He added that despite a potential shift in market sentiment, gold continues to hold up well.
“Investors are left juggling a genuinely mixed picture now — one soft ADP print doesn't make a trend, and one strong claims beat doesn't erase it either, but gold's refusal to sell off on a hawkish-leaning number says conviction in the longer-term bullish case hasn't cracked, leaving policymakers with a far messier dataset to parse than the one-way dovish story that seemed to be writing itself just days ago,” he said.
Kyle Rodda, Senior Financial Market Analyst at Capital.com, said that the data will continue to support the Federal Reserve’s hawkish bias and market expectations for a rate hike in December.
“Another solid piece of US labour market data and a continued trend of low unemployment claims. It's an indicator of a resilient labour market and a "low firing" environment that adds to the case that the Fed can afford to focus on tackling inflation going forward,” he said.
