Gold’s price is consolidating Thursday’s impressive rebound from near $1940, having fluctuated within a $30 weekly range.
Prices rallied 1.3%, marking gold’s best single-day performance in over a month, as the US dollar weakened in response to a surge in the number of Americans filing new claims for unemployment benefits.
Initial claims for state unemployment benefits rose by 28,000 to a seasonally adjusted 261,000 for the week ended June 3, the highest level since October 2021.
However, economists cautioned against reading too much into the data as it covered the Memorial Day holiday, which could have injected some volatility.
The largest increase in applications in nearly two years was driven by rises in Ohio, Minnesota, and California, with auto manufacturers usually closing plants in summer for retooling.
The decline in the US dollar was reflected in the DXY Dollar Index, which sank by 0.76%, the worst performance over 24 hours since March 13th. Gold often behaves as an anti-fiat trading instrument, and the decline in Treasury yields on Thursday also contributed to the rally. The 10-year rate sank by 2.03%, a day after surging by 3.74% due to unexpected tightening from major central banks this week. The softer US dollar and weaker government bond yields created an ideal environment for gold.
Despite the surge in jobless claims, economists did not see any impact on monetary policy, and the Federal Reserve is expected to maintain its policy rate next Wednesday.
Stocks on Wall Street were trading higher, while US Treasury prices rose. While the US jobless claims data may suggest a possible pickup in layoffs, it is still too early to conclude.
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