(Kitco News) - Gold prices are holding initial support above $4,100 an ounce, but downside risks appear to be growing as positive momentum in the U.S. labor market picks up, with the number of American workers applying for first-time unemployment benefits dropping sharply last week.
Initial claims for state unemployment benefits fell by 6,000 to a seasonally adjusted 189,000 for the week ending October 31, the Labor Department announced Thursday. The data was better than expected, as consensus estimates had called for a rise to 197,000.
Weekly jobless claims have dropped to their lowest level since late July.
The gold market is not seeing any significant reaction to the solid labor market data, but prices remain off their session highs. Spot gold last traded at $4,120.60 an ounce, up 1.5% on the day.
Although the gold market remains fairly resilient following the weekly report, analysts note that the precious metal continues to face significant headwinds. The Federal Reserve has said that, because of the healthy labor market, it remains focused on bringing inflation down to its 2% target.
The latest data continues to give the Federal Reserve room to raise interest rates in December. However, the big test comes on Friday with the release of the government's Nonfarm Payrolls report. Markets expect the U.S. economy to have created 65,000 jobs last month.
