Gold prices had already gained momentum on Thursday after a surprising rise in U.S. initial jobless claims, which jumped to 258,000 in the week ending October 4, far above the previous week’s 225,000 and the forecasted 230,000. Continuing claims also rose to 1.861 million, indicating potential signs of strain in the labor market. The jobless claims surge led to a dip in U.S. Treasury yields, a slight weakening of the U.S. Dollar, and provided a lift for gold as a safe-haven asset.
Despite some speculation that the jump in claims may be linked to evacuations in Florida ahead of Hurricane Milton, the data has reinforced expectations that the Federal Reserve may cut interest rates in November to support employment. Fed Chairman Jerome Powell recently shifted focus from inflation to the Fed’s other mandate: full employment.
Following the release of the jobs data, market expectations for a 25 basis point (bps) rate cut in November rose to 89%, according to the CME Fedwatch tool, while the chances of no change fell to 11%.
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