Current Macro Factors Driving Gold and Silver Prices

(Continued from Prior Part)

The initial jobless claims report shows the number of people filing for unemployment benefits for the first time in the United States. It’s compiled weekly by the United States Department of Labor. The report is a good indicator of labor market conditions in the US (SPY) (IVV).

Though the number of people filing for benefits increased in the week ended June 20, it remains at a historic low. According to the initial jobless claims report released on June 25, claims for the week ending June 20 increased by 3,000 week-over-week to a seasonally adjusted 271,000. This was below consensus expectations of 273,000 claims.

Weekly jobless claim data can be volatile, so analysts often prefer the four-week average. The four-week moving average for claims fell by 3,000 week-over-week to 273,750.

The weekly claims figure is a measure of the labor market’s strength. Falling jobless claims bode well for consumer spending, as increased jobs lead to more wages.

Investors should also watch other labor market indicators, including non-farm payrolls, wage growth, and unemployment data, which will be released on July 3 by the United States Department of Labor.

The Fed also watches the jobs data. The jobless claims data are aligned with the Federal Reserve’s observation of improving labor markets. Any sustained improvement on this front may lead the Fed to increase interest rates earlier than expected. This would impact gold-backed ETFs such as the SPDR Gold Trust (GLD).

Other investments affected by US labor market data include Eldorado Gold (EGO), Gold Fields (GFI), Newmont Mining (NEM), and Yamana Gold (AUY). And since the Market Vectors Gold Miners ETF (GDX) invests in these stocks, it’s also affected by jobs data. Together, Newmont Mining and Yamana Gold account for 10.1% of GDX’s holdings.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - US Economic Data, Other Factors That Affect Gold, Silver Prices
• Part 2 - US Dollar Rises on the Strength of Recent US Economic Data
• Part 3 - Why Gold Investors Should Watch Global Money Supply