Gold recovers as strong US labor data offsets earlier pressure from higher oil prices

Gold prices moved higher on Thursday, recovering above the $4,100 mark after stronger-than-expected US lalabourbour market data boosted investor sentiment.

The gains came after the precious metal traded lower earlier in the day as rising oil prices fueled concerns that inflation could remain elevated and delay potential interest rate cuts.

Spot gold climbed to an intraday high of $4,120.16 per ounce shortly after the release of the latest US labor market data at 8:30 am ET.

At the time of writing it was trading at $4,120.10 per ounce.

US labor market remains resilient

According to data released by the US Labor Department on Thursday, initial claims for state unemployment benefits stood at a seasonally adjusted 215,000 for the week ending July 4.

The reading came in below economists' expectations of 218,000, indicating that layoffs remained relatively low.

The previous week's figure was revised to 217,000 from the initially reported 215,000.

The lower-than-expected claims reinforced signs of a resilient labor market, triggering an immediate response in financial markets and helping gold recover from its earlier decline.

Additional labor market indicators also pointed to continued strength.

The four-week moving average of new unemployment claims, which smooths weekly volatility and provides a clearer picture of labor market trends, came in at 218,750, below the consensus estimate of 220,000.

Meanwhile, continuing jobless claims, which track the number of people receiving unemployment benefits, totaled 1.814 million for the week ending June 27.

It was slightly below expectations of 1.820 million and followed a downwardly revised 1.806 million in the previous week.

Earlier weakness driven by oil prices

Before the labor market data was released, gold traded lower as geopolitical tensions in the Middle East lifted crude oil prices.

Renewed fighting between the US and Iran pushed oil prices higher, raising concerns that stronger energy prices could add to inflationary pressures.

In turn, strengthened expectations that central banks, including the US Federal Reserve, may need to maintain restrictive monetary policy for longer.

The rise in oil prices shifted investor focus away from gold's traditional safe-haven appeal, with inflation concerns becoming the dominant market theme during the morning session.

Despite that early weakness, gold recovered as traders reacted to the latest labor market figures.

The rebound highlighted how economic data continues to influence expectations around US monetary policy alongside developments in energy markets.

While gold remains supported by ongoing reserve buying and broader global uncertainty, Thursday's trading showed that near-term price movements continue to be shaped by a combination of labor market data, oil prices, the US dollar, and expectations for the Federal Reserve's next policy moves.