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Buying the Gold Retreat As Yellen Confirms Stable US Employment
Skerdian Meta•Thursday, September 26, 2024•2 min read
Gold prices continued to surge higher today, reaching $2,685 in the European session, but retreated $30 lower after the positive US Unemployment Claims numbers, which showed that the US labour market remains in decent shape. Jobless claims came below expectations, and Treasury Secretary Janet Yellen also confirmed this.
The recent surge in gold prices has been driven by global uncertainty and the weakening of the US dollar following the Federal Reserve’s 50 basis point rate cut last week. Investors are now anticipating another 50 basis point rate cut at the FOMC meeting in November, with a 60% chance of this outcome.
Gold Chart H1 – The 50 SMA Holds As Support
In 2024, a combination of central bank rate cuts, including from the US Federal Reserve, and increased demand for safe-haven assets has fueled a 30% rise in gold prices, setting new records almost daily. Lower interest rates enhance the appeal of gold, which does not provide yields.
US Initial and Continuing Claims
- Initial Jobless Claims: The latest initial jobless claims came in at 218K, lower than the estimated 225K. The prior week’s claims were revised up from 219K to 222K.
- 4-Week Average (Initial Claims): The 4-week moving average for initial jobless claims dropped to 224.75K, down from 228.25K.
- Continuing Claims: Continuing claims were reported at 1.834M, slightly below the estimate of 1.838M. The prior week was revised to 1.821M from 1.829M.
- 4-Week Average (Continuing Claims): The 4-week moving average for continuing claims came in at 1.836M, down from 1.842M last week.
- Largest Increases in Initial Claims: The states with the biggest increases in initial claims for the week ending September 14 were:
- Texas (+2,216)
- New York (+1,842)
- California (+1,108)
- Georgia (+1,014)
- Michigan (+787)
- Largest Decreases in Initial Claims: The states with the biggest decreases in initial claims were:
- Massachusetts (-1,969)
- Wisconsin (-794)
- Connecticut (-569)
- Nebraska (-517)
- Louisiana (-224)
Fed Chair Jerome Powell avoided discussing monetary policy during his introductory remarks at a conference a while ago today. But the formed Federal Reserve chair Yellen commented on employment.
Treasury Secretary Janet Yellen Speaking on CNBC
- Labor Market & Inflation: Yellen noted that there is now more slack in the labor market than previously thought, and that the US is on a path to a soft landing with inflation moderating.
- Banking System: She emphasized that the banking system is well-capitalized, and there’s considerable focus on improving liquidity and ensuring access to the Fed’s discount window.
- Interest Rates Outlook: Yellen suggested that the Fed expects rates to decrease further over time, ultimately aiming for a neutral rate.
- US Deficits: Reducing US deficits will be necessary to keep interest costs manageable in the long term.
- Inflation & Housing: The final challenge for inflation is within the housing sector, but overall inflation is down, and real wages adjusted for inflation are rising.
- US-China Relations: Ties with China have improved, and US-China cooperation in necessary areas is ongoing. Constructive ways to address differences have been found.
- USD Value: Yellen reiterated that the value of the US dollar should be determined by the markets.
Gold Live Chart
GOLD
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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