Initial jobless claims
Initial jobless claims are reported weekly by the U.S. Department of Labor. They show the number of people filing for jobless benefits for the first time in the US. The strength of the job market depends on people having jobs with an income. Since weekly data could have statistical noise, analysts usually prefer the four-week average of jobless claims.
Average jobless claims are at a 15-year low
According to the labor report released on May 21, initial jobless claims for the week ending May 15 increased by 10,000 to a seasonally adjusted 274,000. This was higher than the expectations of 270,000. The four-week moving average was 266,250—this is still the lowest level since April 2000. The number fell by 5,500 week-over-week.
In the above chart, you can see that the four-week moving average for jobless claims is trending downward.
This data shows that the labor market is still resilient despite otherwise modest economic growth in the US. Generally, jobless claims have been on a downtrend since February.
Data impacts gold investors
The labor market’s strength is positive for the economy and the US dollar.
The Fed watches jobs data closely. Any sustained improvement on this front may lead the Fed to increase interest rates earlier than expected. This information negatively impacts precious metal ETFs including the SPDR Gold Trust (GLD) and the iShares Silver Trust (SLV).
It’s also negative for ETFs investing in these stocks like the VanEck Vectors Gold Miners ETF (GDX).
Because it invests in these stocks, GDX is also affected by jobs data. Together, Newmont Mining and Yamana Gold account for 10.1% of GDX’s holdings.
In the next part of this series, we’ll look at the strength of the US dollar. It also impacts gold prices.