Gold Slumps as the Dollar Gains Traction follow Robust Jobless Claims Report

Gold prices moved lower after attempting to break out on Wednesday, as the dollar gained traction following a stronger than expected jobless claims report.  Prices tested former resistance near a downward sloping trend line that connects the highs near 1,365. Momentum has turned negative as the fast stochastic generated a crossover sell signal.

Jobless Claims Dropped

The 9k U.S. initial claims drop to 233k in the first week of April partly reversed the 24k Good Friday pop to 242k from a lean 218k, leaving gyrations above the 45-year low of 217k at the end of February. The trend in claims remains tight despite the rise into April, as we saw in March before a later drop-back. The moving Easter holiday and school breaks often distort claims into early April, so the rise over the last two weeks isn’t problematic with this year’s slightly early holiday. Claims are entering April above lean 228k average in March, versus a super-lean 224k average in February, and prior averages of 232k in January and 240k in December. Next week’s April BLS survey week reading will compare to recent readings of 227k in March, 218k in February, and 226k in January, and 242k in December.

Inflation is Flat in Canda

Canada’s Teranet/National HPI was flat in March after the 0.1% decline in February. The index slowed to a 6.6% year over year growth rate in March from the 7.5% pace in February, continuing its decent from the record high 14.2% year over year gain in June of 2017. The Teranet/National HPI and the new housing price index continue to track an unwinding of home prices this year as more stringent housing sector measures temper activity in the housing sector.

Canada’s new housing price index dropped 0.2% in February following the flat reading in January on a month comparable basis. The pull-back in February was the first month comparable decline since July of 2010. The price index slowed to a 2.6% year over year pace in February from 3.2% year over year in January, as the year comparable measure continues to come off the 3.8% and 3.9% growth rates seen from April to September of last year.