Gold Futures Settle Higher As Dollar Turns Weak

Gold futures settled higher on Thursday, regaining ground after posting losses in the previous two sessions, as the dollar turned weak.

The dollar, which surged higher following hawkish remarks from Fed Chair Jerome Powell who said in his testimony before the congress that the central bank will likely raise interest rates to continue the fight against inflation, turned easy today.

During a second day of congressional testimony, Powell once again acknowledged that the U.S. central bank was wrong in initially thinking inflation was only the result of “transitory” factors.

The dollar index dropped to 105.15, losing about 0.5%.

Gold futures for April ended higher by $16.00 or about 0.9% at $1,834.60 an ounce.

Silver futures for May ended up $0.014 at $20.165 an ounce, while Copper futures for May settled at $4.0390 per pound, gaining $0.0120.

Data from the Labor Department showed initial jobless claims climbed to 211,000 in the week ended March 4th, an increase of 21,000 from the previous week’s unrevised level of 190,000. Economists had expected jobless claims to inch up to 195,000.

With the bigger than expected increase, jobless claims reached their highest level since hitting 223,000 in the week ended December 24th.

The data helped ease concerns about labor market tightness, which the Federal Reserve has pointed to as a reason for stubbornly elevated inflation.

Traders now look ahead to the release of the Labor Department’s more closely watched monthly jobs report on Friday.

Economists currently expect employment to jump by 203,000 jobs in February after surging by 517,000 jobs in January, while the unemployment rate is expected to hold at 3.4 percent.

“Fed Chair Powell seems to have signaled they will accelerate the tightening pace to a half-point rate rise if we get both a hot NFP and inflation reports,” said Edward Moya, senior market analyst at OANDA.

He added, “Some traders are thinking that if tomorrow delivers a not-so-hot jobs report, that we could see Fed fund futures lean towards a quarter-point rate rise for the March 22nd FOMC meeting.”

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