Sharp Rally On Jobless Claims Data

Gold is 0.3% lower in today’s Asia-Pac session, after closing 1.9% higher at $2427.53 on Thursday, its first gain in six sessions.

• Thursday’s move came as the latest US data relieved concerns over a hard landing for the world’s biggest economy and helped support a broader market rally.
• US initial jobless claims fell 17k last week to 233k, a larger drop than the market expected while continuing claims were in line at 1875k. Nevertheless, it was a surprisingly large hawkish reaction from US tsys to data, which showed little improvement in underlying terms. However, the data did at least rule out a further deterioration in the labour market.
• The US 10-year yield returned to around 4%, 4bps higher on the day. The US 2-year finished 8bps cheaper at 4.04%.
• Lower rates are typically positive for gold, which doesn’t pay interest.
• According to MNI’s technicals team, the recent weakness in gold appears to be a correction. A resumption of gains would open $2,483.7, the Jul 17 high, while support is seen at the 50-day EMA, at $2,377.4.