The gold market is experiencing some modest technical bargain hunting after a drop to a 6.5 month low. The US Labor Department reported that weekly jobless claims increased by 2,000 to 204,000, which was better than expected. Despite this positive data, the gold market has not seen much reaction. December gold futures traded at $1,896.30 an ounce, up 0.26% on the day, as some analysts believe that the market is attracting technical buying after Wednesday’s price drop. However, the latest labor market data does not bode well for gold, as it supports the Federal Reserve’s aggressive monetary policies, which have pushed bond yields to fresh 16-year highs.
Federal Reserve Chair Jerome Powell has emphasized the importance of seeing some cooling in the labor market as a sign of controlled inflation before adjusting the current monetary policy stance. The four-week moving average for new claims, a more reliable measure of the labor market, decreased to 211,000. Continuing jobless claims, representing those already receiving benefits, rose to 1.67 million. While the gold market may be temporarily benefiting from technical buying, the overall economic data does not support a positive outlook for the precious metal.
In conclusion, the gold market is seeing a slight rebound after reaching a 6.5 month low, but this is primarily attributed to technical buying. Despite better than expected labor market data, the gold market has not shown much reaction. The latest data supports the Federal Reserve’s aggressive monetary policies but does not bode well for gold. Federal Reserve Chair Jerome Powell has expressed the need for a cooling labor market to control inflation, and while the recent claims data shows some improvement in the US labor market, the overall outlook remains uncertain.