GoldPrice.

The number of Americans filing applications for unemployment benefits dropped 12,000 last week, back near a 50-year low. Jobless claims came in at 209,000 for the week ended August 17, indicating continuous underlying strength in the labor market.

Key Takeaways

• Initial jobless claims were measured at 209,000 for the week ended August 17 vs. 215,000 expected.
• The four-week moving average, a less-volatile metric, rose 500 to 214,500.
• The weekly and monthly figures are both near post-2008 recession lows not seen before then in decades, and continuing claims are also near record lows.

Continuing claims, the number of people collecting unemployment benefits after an initial week of aid, dropped 54,000 to 1.67 million, near a 40-plus year low. Continuing claims came in at 1.67 million, while the four-week average dropped just 750 to 1.69 million. Jobless claims are used to measure layoffs - while the economy has slowed and the labor market has tightened, there is no indication that unemployment has been impacted by the slowdown or the ongoing trade war.

The US created 500,000 fewer jobs since 2018 than previously reported, seriously impacting employment data – however, layoffs have not been widely reported. Consumer spending has maintained healthy demand, allowing companies to maintain their current payrolls. In a tight labor market with a shortage of skilled laborers, it’s unlikely that mass layoffs will occur in any one industry as companies will aim to keep current staff levels and avoid the difficulty of replacing them if the economy picks up again.

With other areas of the economy under pressure, and recent jobs figures revised lower by a huge amount, analysts are keeping a close eye on the labor market. If claims shoot above 230,000 toward 250,000, there will be cause for concern, but as things currently stand, the labor market continues to perform well and bolster the US economy as it continues its record-breaking period of expansion despite global headwinds.

The little pop in initial jobless claims in early August fades away. New claims fall 12,000 to 209,000. Hiring has slowed due to a weaker U.S. economy, but layoffs aren’t on the rise. I wouldn’t worry until claims shoot above 230,000 - and keep rising. https://t.co/yZpkLhC1VH pic.twitter.com/3jp2cN1zj6

— Jeffry Bartash (@jbartash) August 22, 2019

Market Reaction

Gold prices dipped to daily lows following the unexpectedly-strong data from the labor market. Spot gold last traded at $1,497.68/oz, down -0.46% with a high of $1,506.93/oz and a low of $1,492.88/oz. Now below the crucial psychological support at $1,500, gold prices face an uphill battle to regain position.

Market attention is still on the recent report on the FOMC meeting minutes which were released on Wednesday, and warned of significant negative economic consequences as a result of the ongoing trade war. While the labor market data creates a bearish environment for gold in the short-term, the FOMC meeting minutes may be offsetting that slightly by feeding risk-averse sentiment in the marketplace.