Gold Recaptures $1,400 After Weak Economic Reports

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On Thursday, gold (NYSEARCA:GLD) futures for August delivery, the most active contract, jumped $20.20 to close at $1,412 per ounce, while silver (NYSEARCA:SLV) futures for July increased 24 cents to finish at $22.69. It was gold’s highest close in about two weeks.

Both precious metals rallied as the U.S. economy expanded 2.4 percent in the first quarter, according to the Commerce Department. This is slightly lower than previously estimated and below expectations for gross domestic product to rise 2.5 percent.

Adding to the likelihood that central bankers will not tighten monetary policy anytime soon, initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 354,000. Applications have now increased for three consecutive weeks. The four-week average also moved higher to 347,250 initial claims, according to the U.S. Department of Labor.

“This week we had a bit of a pop, but we still are seeing a gradual improvement in the labor market,” BNP Paribas economist Bricklin Dwyer told Bloomberg. “The problem hasn’t really been from firing — it’s been on the other side with a lack of hiring.”

However, the rate at which jobs have been created is still below levels needed to significantly reduce the rate of unemployment. As of April, approximately 11.7 million people were counted as unemployed, although not all were receiving unemployment benefits. Slightly fewer than 3 million people filed for their second week or more of unemployment benefits during the week ended May 18, which was an increase of 63,000 from those filing for continuing claims the previous week.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) increased 1.40 percent, while the iShares Silver Trust (NYSEARCA:SLV) gained 1.15 percent. Gold miners such as Newmont Mining (NYSE:NEM) and Yamana Gold (NYSE:AUY) jumped 3.85 percent and 4.35 percent, respectively. Meanwhile, Endeavour Silver (NYSE:EXK) surged more than 7 percent.

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Disclosure: Long EXK, AG, HL, PHYS

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