Gold Recaptures $1,350 After Worse-Than-Expected Jobless Claims

Gold

On Thursday, gold (NYSEARCA:GLD) futures for December — the most active contract — jumped $16.30 to close at $1,350.30 per ounce, while silver (NYSEARCA:SLV) futures gained 21 cents to finish at $22.82. Major exchanged-traded funds, like the SPDR Gold Trust and iShares Silver Trust, also finished the day higher.

Gold and silver both found buying support as more Americans than expected filed applications for jobless benefits last week. According to the U.S. Department of Labor, jobless claims fell by 12,000 to 350,000 for the week ended October 19. On average, economists expected a decrease to 340,000 claims. Jobless claims have now missed expectations for three consecutive weeks.

Jobless claims provide the first look at the employment situation for any given month, but since weekly figures can be volatile, economists use the four-week moving average to understand wider trends. For the past three weeks, the four-week moving average has been rising. Last week, the measure hit 348,250, an increase of approximately 10,750 from the prior week’s revised 337,500. At the end of September, before claims were distorted by California’s technical problems and the partial government shutdown, and the four-week moving average sat at a six-year low of 305,000.

Excluding the effects that Washington’s political drama has had on jobless claims, the number of Americans applying for unemployment benefits has been trending down. But falling applications have not been accompanied by increased hiring, as is usual. Hiring has slowed in recent months, rather than accelerating. This provides another reason for the Federal Reserve to keep quantitative easing at its current pace of $85 billion per month.

By the end of the trading day on Thursday, shares of the SPDR Gold Trust (NYSEARCA:GLD) gained 0.9 percent while the iShares Silver Trust (NYSEARCA:SLV) increased 0.6 percent. Gold miners (NYSEARCA:GDX) Barrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY) both jumped more than 3 percent. Silver miners (NYSEARCA:SIL) First Majestic Silver (NYSE:AG) and Endeavour Silver (NYSE:EXK) surged 6.8 percent and 5.4 percent, respectively.

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Disclosure: Long EXK, AG, HL, PHYS