According to Ernest Hoffman - market analyst of Kitco News, gold prices have increased strongly after receiving US labor market data.
The U.S. Department of Labor reported on Thursday that initial jobless claims rose to 228,000 in the week ended Oct. 5. That was slightly below expectations, as the consensus estimate forecast 230,000.
In addition to the above information, the market also received data on the US consumer price index (CPI) for September. According to Neils Christensen - an analyst at Kitco News, the US CPI increased 0.2% last month after increasing 0.2% in August, the US Bureau of Labor Statistics. The latest inflation data was slightly stronger than expected, as economists were expecting a 0.1% increase. Over the past 12 months, US inflation increased 2.4%.
Neils Christensen said inflation is eating into the broader economy. The report said core inflation, which strips out volatile food and energy prices, rose 0.3% in September, after a 0.3% increase in August. Economists had forecast a 0.2% increase, according to the consensus estimate. For the year, the core CPI rose 3.3%; economists had expected a 3.2% increase.
Gold prices are trading near session highs despite rising inflation. December gold futures last traded at $2,636.50 an ounce, up 0.4% on the day.
Economists note that there are still expectations that the labor market will weaken through 2025, which should help keep inflationary pressures in check.
“Overall, despite the hotter-than-expected numbers, it seems unlikely that September’s CPI numbers will change the FOMC’s policy outlook,” said Michael Brown, senior research strategist at Pepperstone. “Policymakers have gained enough confidence to move toward their 2% inflation target over the medium term, and the labor market has now become a key determinant of future policy changes.”
Although inflation remains high, Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said the US economy remains resilient:
“We think investors should be reassured that the US economy is doing well. The labor market, consumer spending are holding up well and there doesn’t seem to be any signs of a recession. There is a possibility that the market will be disappointed that the Federal Reserve (FED) is not cutting faster,” said Chris Zaccarelli.
