Gold prices jumped out of the red this morning, when first-time jobless claims last week soared to the highest number in 15 months. The report reversed the dollar's rally to near unchanged, removing that headwind for gold.
Stocks had opened higher this morning, boosted by a rally in US crude, but were shot down by the ominous unemployment numbers. The recent growth in layoffs is beginning to worry traders, especially in light of the collapse in new jobs last month.
Both spot gold and gold futures saw healthy gains Wednesday, with June rising $10.70 (0.9%) to settle at $1,275.50 an ounce. Spot gold closed with a gain of $11.40, also up 0.9%, ending at $1,276.70. This was the best day for gold in a month.
Gold lost ground in Europe overnight, and hit a session low of $1,264.30 near the New York open. The first-time jobless report erased any pressure on gold from the dollar, allowing the yellow metal to jump past the $1,280 mark. This immediately triggered some profit taking, which brought prices back down to unchanged from Wednesday's close.
Gold prices are bouncing between support and resistance this morning, at $1,265 and $1,279 respectively. Further support comes in at $1,257, and the next highest resistance stands at $1,285.
Stocks had opened higher this morning after the shellacking they suffered on Wednesday, but the rally was short-lived. That unexpected growth in the newly-unemployed sent equities down to unchanged. Wall St. had a very bad hump day yesterday, with the Dow losing 217 points, the S&P 500 losing nearly 20 points, and the Nasdaq falling 49 points. This was the worst day since February for the Dow.
That first-time jobless report showed a big jump in claims, climbing 20,000 more applications to 294,000. This is the highest number of first-time jobless claims in 15 months. This adds to the feeling that the plunge in April non-farm payrolls was not a fluke.
West Texas Intermediate crude futures are charting a six month high this morning, as supply disruptions in Canada, Venezuela, and Nigeria erase global daily oil surpluses. A report yesterday that US crude stockpiles had unexpectedly fallen by 3.4 million barrels let WTI jump $1.57 to close at $46.23. Brent futures Wednesday closed up by over $2 a barrel, a gain of 4.6%. This followed a gain of 4.3% Tuesday.
The dollar lost early strength this morning that was gained from a weaker yen. The Bank of Japan warned today that it would intervene in currency markets if necessary to prevent the yen from getting stronger. (How all this central bank intervention in the forex markets doesn't count as waging currency wars, is beyond me.)
In other central bank news, the Bank of England warns today that a vote for Brexit could very well mean a recession for the United Kingdom. They did also note that a successful "Remain" vote would not necessarily mean an economic boost.
If you're tired of all the Presidential election drama, be thankful you aren't a business owner in Brazil. The ever-lasting impeachment drama swirling around president Dilma Rousseff's "cooking the books" on the national debt to help her reelection chances have put government economic policy on hold for a year and a half. This means that business owners are afraid to make plans at all.
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