Gold has come under selling pressure today with the joint release of the PPI index showing tame inflation pressure as well as another Labor Department report pointing to a very robust US labor market. Initial jobless claims fell to 196,000 vs 210,000 expected.
Key Takeaways
- Initial jobless claims were expected to rise from the previous week’s reading of 202,000, but dropped to 196,000 instead.
- The latest reading is the lowest since October 1969, over a 49-year low.
- The less-volatile monthly moving average is also at the lowest since 1969 with a reading of 207,000.
The labor market continues to show signs of strength which may be the undoing of some of the more dour predictions of an impending economic slowdown. Initial jobless claims dropped from 202,000 to 196,000 and the four-week moving average dropped from 214,000 to 207,000.
Initial jobless claims have now declined four weeks in a row. Claims for the previous week were revised upward by 2,000.
The four-week moving average of continuing claims came in at 1.73 million, down 11,000 from the week before. No states were estimated last week according to the Labor Department.
Boom or the last late cycle hurrah? US jobless claims have fallen again this month to 196k (vs 210k expected) which is a 49y low and continuing the trend set by last months print which was revised up from 202k to 204k. pic.twitter.com/NFE6hX3WTj
— Holger Zschaepitz (@Schuldensuehner) April 11, 2019
Labor Strength Expected to Continue
The Federal Reserve predicts that the labor market will remain in good health throughout the year with further growth expected. The central bank expects the current rate of unemployment to dip another 0.1% to 3.7% this year. FOMC Vice Chairman Richard Clarida pointed out on Tuesday that a recent surge in workers returning to the workforce suggests a wider pool of available workers than previously thought.
Jobless claims are a key measure of layoffs, and indicate the health of the labor market which, in turn, is a crucial component of the US economy. After seeming to lose momentum in Q1 2019 following a $1.5 trillion tax cut running its course as well as the ongoing trade war with China, US labor appears to be regaining its strength.
Nonfarm payrolls increased by 196,000 jobs in March, with only 100,000 technically required to maintain growth.
Market Reaction
The price of gold has dipped since the release of the labor market data as well as a report indicating that despite a rise in producer prices, inflation pressure remains low.
Spot gold last traded at $1,295.35/oz, down -1.05% with a high of $1,309.82/oz and a low of $1,295.35.
Gold Price Chart
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