GoldPrice.

Applications for unemployment benefits in the US for the week ending March 23 dropped from a revised 216,000 last week to 211,000 vs 220,000 expected.

Key Takeaways

• Jobless claims dropped from 216,000 to 211,000. The previous week’s figure was revised down from 221,000.
• The four-week moving average was 217,250, down from 220,500 the week before.
• The monthly average for continuing claims came in at 1.751 million vs 1.772 million the week before.

Last week saw a drop in initial jobless claims and the less-volatile monthly average of claims. Continuing claims were up on a weekly basis with an increase from 1.743 million to 1.756 million vs 1.778 million expected. Last week’s figure was revised down from 1.750 million. However, the monthly average is down, dropping to 1.751 million from 1.772 million the week prior.

 With the monthly average of initial jobless claims, a key measure of layoffs, dropping below 220,000, the labor market continues to show signs of strength.

Labor shortages are being reported as an obstacle in many businesses at the moment, and while job growth has slowed intermittently in recent months, this is largely due to a lack of skilled workers rather than available positions.

Regional Data

Initial jobless claims rose the most in Oklahoma, South Carolina, California, Tennessee, and Mississippi. The biggest decrease was seen in Illinois, Oregon, Pennsylvania, Washington, and Texas. Only one state in the top 5 saw over 1,000 new claims, while all top 5 states for decreases saw reductions in initial jobless claims of over 1,000.

No states were estimated according to the Labor Department. The revisions in the previous week’s data were attributed to seasonal factors.

Labor Market Growth

The slowdown in the pace of job growth is to be expected following the major rise seen last year. Fading effects of the $1.5 trillion tax cuts as well as a labor shortage and global economic factors are also behind this trend. The pace of growth is still enough to keep up with growth in the population of US citizens of working age, and at 3.8%, the unemployment rate is near historic lows.

The unemployment rate is not expected to undergo major changes in the near-term – continuing claims rose only slightly between February and March on a monthly basis, indicating relatively flat activity.

Market Reaction

Gold price appears to have taken a hit as a result of the strong labor market data, sinking all the way down to the crucial $1,300 line of support and breaking through.

Good morning. The #PreciousMetals are lower heading into the U.S. session.

U.S. calendar features Q4 GDP (expectations 2.4%), Initial Jobless Claims, Pending Home Sales.#FedSpeak due from Quarles, Clarida and Bowman.#gold #silver #platinum #palladium pic.twitter.com/GnXlVE2kgU

— Peter A. Grant (@GrantOnGold) March 28, 2019

Spot gold last traded at $1,293.78/oz, down -1.23% on the day with a high of $1,312.16/oz and a low of $1293.78/oz. The selloff continues despite disappointing Q4 GDP data as well as reports from the Eurozone indicating difficult economic times. While such reports typically strengthen the use case for gold as a hedge or economic safe haven, the precious metal has breached critical support lines and it remains to be seen whether it will climb back up in today’s session.