James Hyerczyk
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Gold futures are rebounding late in the session on Thursday as a reversal down in Treasury yields pushed the U.S. Dollar lower against a basket of major currencies, driving up foreign demand for dollar-denominated gold.

At 19:48 GMT, June Comex gold futures are trading $1827.00, up $4.20 or +0.23%.

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In economic news, data showed fewer Americans filed new claims for unemployment benefits last week. Meanwhile, producer prices increased more than expected in April.

This followed Wednesday’s data showing U.S. consumer prices jumped the most in nearly 12 years last month, which intensified concerns over rising inflation and possible interest rate hikes.

While some investors believe the Fed may be wrong about the rise in inflation being temporary, Federal Reserve policymakers appear to be unnerved by the jump in the CPI, pledging to keep rates low until the economy reaches full employment and inflation hits 2% and is on track to “moderately” exceed that level for some time.

The battle between those who believe the Fed is poised to begin tightening policy sooner than expected and those who believe, policymakers will be willing to ride out the “transitory” rise in inflation is going to be the source of volatility for months to come.

US Weekly Jobless Claims at 14-month low; Inflation Heating Up

The number of Americans filing new claims for unemployment benefits dropped to a 14-month low last week as companies held onto their workers amid a growing labor shortage that helped to curb employment growth in April.

The scramble for workers comes as the reopening economy is experiencing a boom in demand, resulting in widespread shortages of inputs at factories and fanning inflation. Producer prices increased more than expected in April, leading to the biggest annual gain since 2010, other data showed on Thursday.

Initial claims for state unemployment benefits dropped 34,000 to a seasonally adjusted 473,000 for the week-ended May 8, the Labor Department said. That was the lowest since mid-March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 infections.

Economists polled by Reuters had forecast 490,000 applications for the latest week. The decrease in claims was led by Michigan, New York and Florida.

Claims have dropped from a record 6.149 million in early April 2020, but remain well above the 200,000 to 250,000 range that is viewed as consistent with a healthy labor market.

The government has provided nearly $6 trillion in pandemic relief over the past year. More than a third of the population has been fully vaccinated, leading many states to lift most capacity restrictions on businesses.

The resulting pent-up demand is pushing against supply constraints. In another report on Thursday, the Labor Department said its producer price index for final demand rose 0.6% in April after surging in March.

For a look at all of today’s economic events, check out our economic calendar.
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