Gold futures traded slightly higher on Thursday, buoyed by a weaker U.S. dollar, a fall in yields, and general weakness in equities as initial jobless claims drop.
December gold traded at $5.30, or 0.3%, higher at $1,798.80 an ounce, following a 0.3% decline on Wednesday. The yellow metal slightly rose after the Federal Reserve said economic growth was slowing amid the spread of the COVID-19 delta variant.
What’s pushing gold up?
The weekly data on jobless benefits investors have been waiting for just came in. According to the data, the number of Americans filing new claims for jobless benefits fell last week to its lowest in nearly 18 months, with initial jobless claims dropping 35,000 to an adjusted 310,000 for the week, according to the Labor Department.
The data is proof that labor shortages hindered job growth as opposed to a previous popular misconception that a cooling demand for workers was the culprit.
Also Read: S&P 500 Down as U.S. Stocks Struggle Ahead of September
310,000 is the lowest level since mid-March 2020 when businesses were closed to contain the spread of COVID-19. At the time, economists forecasted 335,000 for last week.
Despite claims dropping from a record 6.149 million in April last year, they, however, remain above the 200,000-250,000 range–a range that is consistent with healthy market conditions. For one thing, employment data has become a key measure of investors’ bets on the pace of America’s recovery from the COVID-19 pandemic.
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Holding up
The latest jobless claims report suggests the labor market might be holding up, despite a resurgence in COVID-19 cases, mostly driven by the delta variant. For one thing, rising infections were responsible for taunting job growth in August.
Job openings, according to government data, surged to a record 10.9 million in July 2021. Yet, about 8.4 million people are officially unemployed, thanks to the coronavirus pandemic.
As September rolls on, there’s hope that the labor shortage will get better following the expiration of the government-funded unemployment benefits. However, the resurgence of the delta variant may stop some people from returning to work.
The termination of the government’s expanded benefits will also force the unemployed to look for employment.
As gold futures edged higher, other stocks take a hit.
The Dow Jones Industrial Average and the S&P 500 looked to start trade on Thursday on the backfoot, down -0.20% and -0.13%, respectively. Yields were also lower as investors sought to hedge their bets with safe havens. The yield on the 10-year Treasury was at 1.33%, lower than its peak this week at 1.37%.
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