Gold Up More than 1% on Unemployment Benefits in the US

Gold prices rebounded on Thursday despite a rise in the dollar as US yields rose. Moreover, gold has been unable to obtain refugee status, but its volatility remains high and will continue to generate volatile price action. 

After a larger-than-expected rise in US jobless claims, the riskiest assets unleashed. They doubled after the record levels released the previous week. Fears of economic damage intensified in the US. As a result, gold prices rose more than 1% on Thursday.

Spot gold gained 1.3% at $ 1,610.68 per ounce. Gold futures in the United States closed up 2.9% at $1,637.70 an ounce.

Shares on Wall Street fell after the explosive surge in requests but later recovered.

Edward Meir, an analyst at ED&F Man Capital Markets, said in a note that gold is likely to continue to play a significant role in investor money allocations in the coming months due to all the turmoil. However, volatility will remain very high.

Among other precious metals, silver rose 3 % to $ 14.42 an ounce. Meanwhile, palladium dropped 0.9 % to $ 2,197.63 an ounce, and platinum increased 1 % to $ 724.84 an ounce. 

Jobless claims hit a record in the US

The coronavirus pandemic has infected nearly 1 million people globally and has killed more than 50,000. It has also forced countries to enact restrictions and confinements to combat the outbreak.

The last three weeks have been the most devastating period for the US job market. The number of Americans who applied for state unemployment aid last week climbed to a record 6.65 million, as more jurisdictions took steps to keep people at home to curb the spread of the virus. During their lifetimes, hardly any American has ever witnessed the job market decline the country experienced during this period. Economists describe the increase as a disaster.

In the last two weeks alone, Americans have filed almost 10 million jobless claims. It corresponds to America’s 165 million workforces, which implies a 9.5 percent unemployment rate, according to Andrew Hollenhorst, a Citi economist.

Businesses continue to lay off workers amid the coronavirus outbreak. 

Looking at the absolute unemployment for the state’s population, California scored highest with more than 878,000 workers applying for benefits, compared to the 186,000 claims of the previous week, it’s 692,000 more. That is an increase of more than 350%. 

Hellenhorst anticipates that further job loss is very likely to push unemployment above 10%.