How Did Unemployment Claims Move Gold?
Gold fell once again on Thursday, October 5, 2017. Gold futures for November expiration were 0.30% lower than the previous day and ended at $1,271.40 per ounce. The other three precious metals were trading higher for the day. Silver, platinum, and palladium rose 0.08%, 0.40%, and 1.8%, respectively.
The fall in gold was most likely due to the rebound in the US dollar. The US dollar index depicted by the DXY Currency Index rose 0.54% on Thursday due to stronger economic numbers that came out of the United States. DXY was at its two-and-a-half-month high.
The unemployment claims figure, which measures the number of individuals who filed for unemployment insurance for the first time during the past week, was 260,000. The figure was lower than analysts’ expectation of 266,000.
Lower unemployment claims are good for the economy and thus give a lift to the domestic currency. But good economic numbers are harmful to precious metals, making their haven bids fall. The rise of the dollar is also negative for gold since it’s a dollar-denominated asset. The surge in the dollar causes the demand for the dollar currency and greenback assets to fall.
A fall in the dollar also causes the demand for the dollar and dollar-based assets to rise. The iShares Gold Trust (IAU) and the iShares Silver Trust (SLV), gold and silver-based funds, each fell 1.4% on a five-day trailing basis.
Mining shares that also fell in the last five trading days are Gold Fields (GFI), Agnico Eagle Mines (AEM), Yamana Gold (AUY), and Randgold Resources (GOLD), which fell 1.4%, 0.72%, 4.4%, and 1.3%, respectively, on a five-day trailing basis.