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.

Gold surged above $4,100 in early U.S. trading Thursday, extending Wednesday’s sharp advance as falling Treasury yields and a softer dollar strengthened demand for precious metals. Democratic victories in the U.S. midterm elections also prompted investors to reassess federal borrowing, fiscal policy and inflation risks.

Spot gold traded near $4,119.50 an ounce at the latest verified morning reading, gaining $60.30, or 1.49%. The metal earlier reached $4,146.63, its highest level since Oct. 20, as it continued recovering from October’s steep correction.

Silver joined the rally, trading near $52.390 an ounce after rising $0.294, or 0.56%. The advance reflected the broader precious metals recovery, although silver remained sensitive to manufacturing activity, energy costs and the economic growth outlook because of its industrial exposure.

Thursday’s economic reports showed stronger productivity and moderating labor costs alongside continued resilience in employment. Nonfarm business productivity increased at a seasonally adjusted annualized rate of 3.6% during the third quarter, accelerating from an upwardly revised 2.1% increase in the second quarter.

Output rose 3.7%, while hours worked advanced only 0.1%. Unit labor costs declined at a 0.7% annualized rate, reversing the previous quarter’s revised 1.9% increase as productivity growth exceeded the 2.9% rise in hourly compensation.

The labor cost decline suggested that improving efficiency was helping businesses absorb wage increases without placing equivalent upward pressure on prices. Still, the relationship between stronger productivity and consumer inflation is not immediate, limiting the extent of the relief for bullion investors.

Initial jobless claims dropped by 6,000 to a seasonally adjusted 189,000 in the week ended Oct. 31, beating expectations near 196,000. Claims were also below the previous week’s upwardly revised reading of 195,000, while the four week moving average declined by 2,250 to 194,750.

Continuing claims increased by 23,000 to 1.718 million in the week ended Oct. 24, and the insured unemployment rate remained at 1.1%. The figures indicated that employers continued limiting layoffs, though the rise in continuing claims showed that some workers were having greater difficulty finding new employment.

Markets remained focused on Tuesday’s Democratic sweep, which gave the party control of both the House of Representatives and the Senate. The result raised expectations for legislative gridlock and potentially reduced President Donald Trump’s ability to pursue additional fiscal spending and tax reductions.

Treasury yields fell Wednesday as investors reconsidered federal borrowing requirements and the inflation implications of potentially less expansionary fiscal policy. The benchmark 10 year yield ended near 4.89%, roughly 6 basis points lower, while the two year yield moved toward 4.58%.

The weaker dollar also supported precious metals by improving affordability for buyers using other currencies and reducing the opportunity cost of holding bullion that produces no yield. Even so, interest rate futures continued to indicate a substantial probability that the Federal Reserve would increase rates again in December.

Recent futures pricing placed the probability of a 25 basis point increase at the Dec. 8 to 9 meeting at approximately 80%, compared with expectations above 80% before the election. The Fed held its benchmark target range at 3.75% to 4.00% in October, while two policymakers favored an immediate increase.

Third quarter gross domestic product grew at a 3.4% annualized pace, and September core personal consumption expenditures inflation remained at 3.1% annually. Lower unit labor costs offered some relief from inflation concerns, but resilient employment conditions reinforced expectations that the Fed retained room to maintain restrictive policy.

Attention now shifts to Friday’s October employment report, scheduled for 8:30 a.m. EST. Economists expect nonfarm payrolls to rise by approximately 50,000 to 60,000 jobs, with unemployment forecast to remain near 4.2%, while average hourly earnings will be examined for signs of easing wage inflation.

Oil markets added another layer of uncertainty as traders weighed continuing security risks in the Strait of Hormuz against prospects for negotiations between Washington and Tehran. Brent crude rose approximately 1.6% to $96.15 a barrel, while Nymex WTI gained 0.6% to about $88.64 after crude prices fell more than 8% Wednesday.

Gold bulls are targeting resistance at $4,146.00, with a sustained four hour close above that level pointing toward $4,212.00. Support is seen at $4,075.00 and $3,989.00, while silver faces resistance from $53.070 to $54.450 and support at $51.240 and $50.030.

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.