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The U.S. Labor Department said Thursday the number of people who filed for unemployment assistance in the U.S. last week rose by 24,000 to 329,000, the largest number of claims in more than a month, and above analysts’ forecast for an increase to 315,000.
Data in 2014 has shown an overall trend of improvement in the U.S. labor market, and jobless claims dropped to their lowest level since 2007 at the beginning of April. However, inconsistencies in that overall trend have shaken confidence among some investors as to whether the improvement in growth can be sustained, and that lack of certainty is driving them to the perceived safety of gold.
For precious metals investors, focus on the health of the U.S. labor market ultimately took precedence over data released earlier in the session, showing orders for U.S. durable goods rose more than expected in March.
Orders for long lasting manufactured goods rose 2.6% last month, according to U.S. Commerce Department data, ahead of expectations for a 2% gain. Core durable goods orders, which exclude volatile transportation items, rose 2% in March, easily surpassing forecasts for a 0.6% gain.
Meanwhile, increasing market concerns over the crisis in Ukraine once again buoyed gold prices amid rising concerns the U.S. will ultimately be forced into a more active military intervention in Eastern Europe than previously thought.
Reports Thursday said Russia has begun military drills near its border with Ukraine, after five pro-Russian separatists allegedly died in clashes with government troops in eastern Ukraine.
“The order to use force against civilians has already been given, and if this military machine is not stopped, the amount of casualties will only grow,” Russian Defense Minister Sergey Shoigu said Thursday from Moscow.
“War games by NATO in Poland and the Baltic states are also not helping the normalization of the situation. We are forced to react to the situation.”
Reports of the latest developments in Ukraine fueled a moderate selloff in equity markets and helped spur gold above its earlier lows.
“Traders are taking this threat very seriously and we having seen a hasty change in sentiment on our end,” said Naeem Aslam, chief market analyst at Ava Trade. “If Russia does follow its plan, then we will anticipate a further sharp selloff across the board for the equity markets and groundbreaking earnings reports from Apple and Facebook may not be able to pull the markets up.”
Given all that, “gold could be the biggest beneficiary of this situation and in no time we could be back above the $1,300 level,” he added.
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Market News Archive
This week on the Vault, Brian returns to the hosting chair with a challenge to the Federal Reserve's assertion that higher inflation leads to lower unemployment and a more robust U.S. economy. Mike Getlin, CEO of Merit Gold breaks down this week's gold mark...watch more
Gold Standard with Brian Baker
Mike Getlin, CEO of Merit Gold joins Brian to discuss this week's gold market, the impact of a war in Eastern Europe on bullion prices, and his latest op-ed piece, "Viewpoint: Risk Versus Reward in Gold."watch more
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