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Gold remained under pressure after new U.S. labor market data showed that applications for first time unemployment benefits stayed below 200,000. The resilient reading could leave the precious metal exposed to further losses as investors weigh the possibility of additional Federal Reserve interest rate increases.

Initial claims for state unemployment benefits reached a seasonally adjusted 197,000 for the week ending September 19, the Labor Department reported Thursday. The figure came in slightly below the consensus forecast of 201,000 claims.

The previous week’s figure was revised slightly higher to 198,000 claims. That left the latest total below both market expectations and the revised reading from the prior week, reinforcing the picture of a labor market that remains fairly resilient.

The sub 200,000 result matters for gold because some analysts believe a healthy labor market gives the Federal Reserve greater room to raise interest rates. Higher rates can continue weighing on the metal as the central bank maintains its tightening bias.

Gold showed little immediate reaction to the latest employment report, but the market remained in negative territory. Spot gold last traded at $4,264.40 an ounce, down 0.50% on the day.

The precious metal also continued struggling below the $4,300 an ounce level. That barrier remained out of reach as the market confronted rising Treasury yields and the prospect that monetary policy could remain tight.

The U.S. 10 year Treasury yield climbed to 5.11%, its highest level in 20 years. The move added another source of pressure for gold while investors considered what the claims figures could mean for the Federal Reserve’s next steps.

Persistent inflation pressures have continued driving bond yields higher. According to the report, the broader economic environment is forcing the Federal Reserve to maintain its preference for tighter policy.

The employment figures therefore arrived at an uncomfortable moment for the gold market. Although the claims total differed only modestly from expectations, its position below 200,000 supported the view that labor conditions had not weakened enough to remove the possibility of further rate increases.

A separate measure of new applications offered a broader view of labor market conditions. The four week moving average for new claims came in at 202,250, compared with the previous week’s revised average of 204,000.

That moving average is often regarded as a more reliable labor market measure because it smooths out volatility between individual weeks. The decline from the previous revised average remained consistent with the report’s description of fairly resilient employment conditions.

Continuing jobless claims provided another part of the labor picture. These claims represent people who are already receiving unemployment benefits rather than workers filing an initial application.

Continuing claims totaled 1.719 million for the week ending September 12. That was slightly above the previous week’s revised level of 1.717 million, showing a modest increase among people who remained on benefits.

The two claims measures moved differently within their respective reporting periods. Initial filings remained below the prior week’s revised figure, while continuing claims edged above their own previous revised level.

For gold traders, the central issue remained the room available to the Federal Reserve. Some analysts noted that the employment data could keep weighing on bullion because a healthy labor market allows policymakers more latitude to lift interest rates.

The market’s subdued initial response did not remove the wider pressure visible in prices. Gold remained below $4,300 an ounce, spot prices were down 0.50%, and the 10 year Treasury yield stood at a 20 year high of 5.11%.

Taken together, the report showed initial jobless claims below expectations, a lower four week moving average, and a slight increase in continuing claims. For gold, the combination left the rate outlook firmly in focus as persistent inflation and labor market resilience supported the Federal Reserve’s tightening bias.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.