Since 22 August , the price of gold has been rising steadily. The monthly candlestick chart for September closed with a large bullish candle, indicating the strong momentum of the bulls. At the interest rate meeting in September, the Federal Reserve cut interest rates by 25 basis points as expected. However, with the continuous decline in employment data, the weakening trend of the labor market has become increasingly prominent, and market expectations for interest rate cuts have gradually heated up. As of the end of October so far, the probability of an interest rate cut has risen to nearly 100%.
The nonfarm payroll employment in August increased by only 22,000, while the ADP employment data for September even decreased by 32,000. Combined with the nonfarm payroll data over the past six months, the downward trend of the job market is obvious. Revised data released by the U.S. Department of Labor shows that in the year ending March this year, the actual number of newly added nonfarm jobs was 911,000 less than the initially announced figure. The average monthly increase was only 71,000, which is far lower than the pre-revision average monthly increase of 147,000, and also a significant drop compared with the average of previous years.
The JOLTS (Job Openings and Labor Turnover Survey) data for August showed that the number of job openings rose to 7.23 million, higher than 7.21 million in July. This indicates that the number of layoffs has decreased, and the number of resignations has also shown a downward trend. However, the hiring plans in August fell to the lowest level since June last year, leaving job seekers with fewer opportunities. Surveys show that due to increased economic uncertainty caused by Trump's tariff policies, many enterprises have adopted a cautious attitude towards recruitment decisions. At the same time, the Federal Reserve's continuous interest rate hikes since 2022 and the long-term maintenance of high interest rates have led to a significant increase in corporate costs.
The U.S. government shut down again on October 1, marking another shutdown event in seven years due to the failure to pass the government funding bill. Currently, the growth of the U.S. labor market is slowing down, inflationary pressures still exist, and the potential delay in the release of various data caused by the government shutdown has significantly increased the possibility that the Federal Reserve will turn dovish at its next interest rate meeting (28-29 October).
According to data from the CME Group's "FedWatch Tool," the probability of a 25-basis-point interest rate cut in October is as high as 99.4%, while the probability of keeping interest rates unchanged is only 0.6%. For December, the probability of keeping interest rates unchanged is 0.1%, the probability of a cumulative interest rate cut of 25 basis points is 11%, and the probability of a cumulative interest rate cut of 50 basis points is 89%.
Owen, a senior gold analyst at Zhisheng Research under the special invitation of Plotio, believes that the slowdown of the U.S. labor market has become the most troublesome issue for the Federal Reserve at present, while the inflation rate has not yet dropped to the Federal Reserve's 2% target. If the unemployment rate rises significantly in the future, the Federal Reserve may have to adopt more aggressive interest rate cut measures, shifting from preventive interest rate cuts to "recessionary interest rate cuts," which is likely to trigger large market fluctuations. From a technical perspective, both the weekly and monthly charts of gold show a bullish trend, with the upward movement continuing, and it is expected to test the $4,000 level in the short term.
Important Statement：
The above content and views are provided by the third-party partner platform, Zhisheng, for reference only and do not constitute any investment advice. Investors operate at their own risk based on this information.
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