Gold held its ground despite fresh evidence that the U.S. labor market remains relatively healthy, a development that could give the Federal Reserve more room to raise interest rates. The metal showed little reaction to the latest unemployment claims figures.
Initial claims for state unemployment benefits totaled a seasonally adjusted 197,000 for the week ending Sept. 26, the Labor Department reported Thursday. The result was slightly better than expectations and kept claims below a key level for the third consecutive month.
The previous week’s figure was revised modestly higher to 198,000 claims. It had initially been reported at 197,000, putting the revised total just 1,000 above the original figure.
The claims data offered another indication of stability in the labor market. Analysts noted that such conditions could leave the Federal Reserve with room to raise interest rates at its monetary policy meeting next week.
Expectations also remain in place for at least one additional rate hike before the end of the year. Those expectations are supporting U.S. 10 year yields near 5.30%, their highest level in nearly 20 years.
Higher interest rates and elevated yields can increase the opportunity costs confronting the gold market. Even so, the precious metal did not register a major negative response following the positive employment data.
Spot gold last traded at $4,182.50 per ounce, up 0.65% on the day. That gain showed the market continuing to hold firm even as labor conditions and interest rate expectations presented potential headwinds.
The report’s broader trend measure also pointed to relative stability. The four week moving average for new claims stood at 200,000, down from the previous week’s revised average of 202,500.
That moving average is often regarded as a more reliable gauge of labor market conditions because it smooths volatility between individual weeks. Its decline placed the latest reading 2,500 claims below the prior revised average.
Continuing jobless claims also moved lower, according to the report. These claims represent the number of people who are already receiving unemployment benefits rather than those making initial applications.
Continuing claims came in at 1.701 million during the week ending Sept. 19. That compared with the previous week’s revised level of 1.712 million, a decline of 11,000.
The report indicated that unemployed workers were finding new jobs. Together with initial claims remaining below the key level for a third consecutive month, the continuing claims figure supported the picture of a labor market that remains stable.
For gold, the market response was notable because the employment figures reinforced the possibility of tighter monetary policy. Analysts said the labor market gives the Federal Reserve room to act, while expectations for another increase are already helping keep U.S. 10 year yields near a nearly two decade high.
Yet gold’s price action remained positive rather than retreating under that pressure. The metal’s 0.65% daily gain left it at $4,182.50 per ounce in the latest reported trade.
The latest figures therefore placed two market forces in clear view. Labor stability and elevated yields represented potential obstacles for gold, but the metal continued to hold its ground without a major reaction to the employment report.
Initial claims of 197,000, a four week average of 200,000, and continuing claims of 1.701 million all shaped the latest labor market snapshot. Gold nevertheless remained higher on the day as investors faced the prospect of another Federal Reserve rate hike before year end.