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The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits increased by 23,000 last week to 302,000 from the previous week’s total of 279,000, which was the lowest in 14 years. The four-week moving average, considered a less volatile measure, was 297,250, the first time the monthly average has fallen below 300,000 since April 2006.
This morning’s data comes on the heels of Wednesday’s policy decision from the Federal Reserve, which reduced the central bank’s bond-buying program by another $10 billion per month. The statement failed to provide clarity on when the Fed could begin to hike rates, however, beyond reiterating that interest rates will remain low for a “considerable time” as policymakers look for improvement in a “range” of labor indicators.
Federal Reserve Chairwoman Janet Yellen was equally ambiguous in her language to lawmakers earlier this month, saying that interest-rate increases may come “sooner and be more rapid than currently envisioned” if the labor market continues to improve more quickly than anticipated.
Investors are now turning their attention to Friday’s U.S. jobs report for July, which was expected to indicate that the recovery in the labor market is continuing.
Gold prices are currently on track to post a 2.5% monthly loss in July. The metal closed below the psychologically important $1,300 per ounce level on Wednesday after data from the Commerce Department showed that the U.S. economy grew at a 4% annualized rate in the second quarter, following a 2.1% contraction in the first three months of the year.
"The biggest price move we had over the past couple of months was in reaction to (Fed Chair Janet) Yellen's comments on interest rates in mid-June, and it seems to me that the focus is now economic growth," Citi analyst David Wilson told Reuters.
"But if you have strong economic growth and low interest rates, you at some point reach capacity constraints and then inflation rises," he added. "And if you are scared of inflation, you buy gold as the metal is seen as a hedge against it."
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