GoldPrice.

Gold prices have bounced after a report showing unexpectedly-high jobless claims coincided with a lower-than-expected PPI for January and the lowest retail sales in nine years. Initial jobless claims rose by 4,000 to 239,000 last week, defying expectations that the numbers would shrink after the partial government shutdown ended.

Key Takeaways

• Initial jobless claims rose by 4,000 last week and by 6,500 over the course of the last four weeks. The four-week moving average is considered to be a more stable and accurate reflection of labor data.
• The report demonstrates a big miss with the expected figure at 225,000.
• The increase in the less-volatile four-week moving average is the highest since January 2018.
• Jobless claims help measure layoffs – while unexpectedly high, the numbers are still relatively low compared to previous years and the labor market is still viewed as healthy.

The labor market data was less robust than expected this week with a yearly high in workers applying for unemployment benefits, although analysts are still viewing the labor market as strong and with an unemployment rate of just 4%, near full employment. Employers added 304,000 jobs last month in the US, the most in almost a year.

Continuing claims, reported with a one-week lag, rose by 37,000 to 1.773 million. The unemployment rate for people eligible for benefits saw no change, holding firm at 1.2%, and initial jobless claims for the previous week were revised upward by 1,000.

The latest data comes following the longest-ever shutdown of the US government as well as higher interest rates and international trade disputes and economic concerns.

Economic Slowdown?

With retail sales hitting a nine-year low and an unexpected contraction in producer prices, the recent jobs data could be interpreted as being indicative of a general economic slowdown in the US. The partial government shutdown could be influencing the jobless claims figures – while furloughed federal workers are not taken into account, private government contractors were put out of work during the 35-day shutdown and that may be having an effect on current data.

Analysts have also stated that jobless claims are generally more volatile from December to February with a higher number of temporary holiday season workers generating a higher rate of staff turnover than seen other times of the year.

Initial jobless claims post surprise 4,000 increase to 239,000 in week ended Feb. 9. Might still be post-holiday noise, but monthly average is highest in a year. This will be a key number to watch the next few weeks for U.S. economy

— Jeffry Bartash (@jbartash) February 14, 2019

Expert Outlook

A few weeks ago, billionaire investor Jeffrey Gundlach stated “The most recessionary signal at present is consumer future expectations relative to current conditions,” adding that it was “one of the worst readings ever” and signaling that a recession may be on the way.

Senior director of economic indicators at The Conference Board Lynn Franco said that "Shock events such as government shutdowns (i.e. 2013) tend to have sharp, but temporary, impacts on consumer confidence.”

Market Reaction

Gold has ticked straight upward following the series of negative reports which combine to paint a poor picture of the health of the US economy and have created downward pressure on the USD in the past hour.

Gold last traded at $1,311.30/oz, up 0.33% with a high of $1,312.37/oz and a low of $1,303.51/oz. Spot gold has been nearing the $1,300/oz line of support with April gold futures down -0.11% today at $1,313.40/oz, slightly above today’s current range.