Analysis of Unemployment Claims w/w

Unemployment Claims shows the number of people who applied for unemployment insurance for the first time during the past week. This statistic is one of the first economic data of the United States and its impact on the market varies every week!

Generally, Unemployment Claims is an indicator of the labor market and economic situation of the United States. If this statistic is higher or lower than expected, it can have a positive or negative impact on the value of the US dollar and consequently on the currency pairs that include the dollar.

For example, if Unemployment Claims is lower than expected, it means that the labor market has improved and the number of unemployed people has decreased. This news is positive for the US dollar and may cause it to strengthen. As a result, currency pairs such as EUR/USD and GBP/USD may decline, while currency pairs such as USD/JPY and USD/CAD may increase.

Conversely, if Unemployment Claims is higher than expected, it means that the labor market has worsened and the number of unemployed people has increased. This news is negative for the US dollar and may cause it to weaken. As a result, currency pairs such as EUR/USD and GBP/USD may increase, while currency pairs such as USD/JPY and USD/CAD may decrease.

But what is the impact of Unemployment Claims on gold’s price ?
Generally, gold prices depend on various factors such as inflation, interest rates, supply and demand, and political events. Among these factors, interest rate is the most influential factor for gold prices. In other words, when interest rate decreases, gold prices will increase and when interest rate increases, gold prices will decrease.

Now the question is how interest rate is related to Unemployment Claims ?
The answer is that interest rate is determined by the central bank of the United States or the Federal Reserve. The Federal Reserve adjusts interest rate according to economic conditions and labor market. If the Federal Reserve wants to stimulate the economy and facilitate employment growth, it may lower interest rate. If the Federal Reserve wants to control inflation and maintain purchasing power of the dollar, it may raise interest rate.

Therefore, it can be said that Unemployment Claims indirectly affects gold prices. If Unemployment Claims is higher than expected, it means that the economy is weak and the Federal Reserve may lower interest rate. As a result, gold prices may increase. If Unemployment Claims is lower than expected, it means that the economy is strong and the Federal Reserve may raise interest rate. As a result, gold prices may decrease.

Author : ArmanShabanTrading Team (AST Team)

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