At the beginning of the Asian market on Thursday (September 5th), spot gold fluctuated narrowly and is currently trading around $246.45 per ounce. Gold prices bottomed out on Wednesday, hitting a two-week low of $2471.77/ounce and closing at $2495.45/ounce, helped by the decline in the yields of the US dollar and US treasury bond bonds. The reduction of US job vacancies earlier raised the expectation of the US Federal Reserve to cut interest rates by 50 basis points in September.

The number of job vacancies in the United States has dropped to the lowest level in three and a half years, but it may not be enough to trigger a significant interest rate cut by the Federal Reserve

The number of job vacancies in the United States in July fell to the lowest level in three and a half years, indicating that the labor market is losing momentum, but this decline may not be enough to push the Federal Reserve to consider a significant interest rate cut this month.

The Job Openings and Labor Mobility Survey (JOLTS) released by the US Department of Labor on Wednesday showed a greater than expected decline in job vacancies in July. In July, each unemployed person corresponded to 1.07 vacant positions, the lowest since May 2021 and lower than June's 1.16. The ratio of job vacancies to unemployed individuals reached a peak of slightly above 2.0 in 2022.

However, the job market may not have deteriorated. The Federal Reserve stated in its brown book report that employment levels have been "generally flat or slightly rising in recent weeks".

Investors and Federal Reserve officials are closely monitoring the labor market, as the unemployment rate has risen for four consecutive months, exacerbating concerns about an economic recession. Economists insist on their prediction that the Federal Reserve will cut interest rates by 25 basis points at its meeting on September 17-18. This largely depends on the August employment report scheduled to be released on Friday.

Does this report imply the need for a 50 basis point rate cut in September? "Asked Conrad DeQuadros, Senior Economic Advisor at Brean Capital. We would say no because... by historical standards, the ratio of job vacancies to unemployed people is still very high

The US Bureau of Labor Statistics stated that the number of job vacancies on the last day of July decreased by 237000 compared to the end of June, to 7.673 million, the lowest level since January 2021. At the end of June, the number of job vacancies was revised down to 7.91 million, compared to the previous value of 8.184 million. Job vacancies are an indicator of labor demand.

Economists previously predicted that there would be 8.1 million job vacancies in July. The number of job vacancies reached a peak of 12.182 million in March 2022, a decrease of 1.1 million over the past year. The decrease in job vacancies is mainly concentrated in small businesses. The job vacancy rate dropped from 4.8% in June to 4.6%, the lowest level since December 2020.

The number of recruits increased by 273000 to 5.521 million. The recruitment rate has increased from 3.3% in June to 3.5%. The number of layoffs increased by 202000 to 1.762 million, the highest level since March 2023. However, by historical standards, the number of layoffs is still relatively small.

The layoff rate has increased from 1.0% in June to 1.1%, still at a relatively low level. The Beige Book report released by the Federal Reserve on Wednesday also emphasized fewer layoffs. According to the brown book, five regions reported a slight or moderate increase in overall employment at the end of August.

However, the report points out that "some regions have reported that companies have reduced shifts and working hours, unfilled advertising positions, or reduced employee numbers through natural attrition, but layoffs are still minimal

The US trade deficit is widening

A report released by the Bureau of Economic Analysis of the US Department of Commerce on Wednesday showed that the trade deficit widened by 7.9%, reaching the highest level since June 2022 at $78.8 billion, emphasizing strong domestic demand.

Imports of goods increased by 2.3%, reaching the highest level since June 2022 at $278.2 billion. Among them, the import of capital goods increased by 3.3 billion US dollars, reaching a record high, mainly benefiting from computer accessories.

The Biden administration previously announced plans to impose higher tariffs on electric vehicles, batteries, solar products, and other goods imported from major Asian countries.

The US government stated last week that it will announce the final decision in the "coming days". People are also concerned that if former President Trump returns to the White House after the November 5th election, he will impose higher tariffs on goods from Asian powers.

The politically sensitive trade deficit in goods with China increased by $4.9 billion to $27.2 billion.

Exports increased by 0.5% to reach 266.6 billion US dollars. Commodity exports increased by 0.4% to reach 175.1 billion US dollars. After adjusting for inflation, the goods trade deficit was 97.6 billion US dollars, an increase of 6.9%.

Federal Reserve's Beige Book: US Economic Activity Slows, Companies Reduce Recruitment

From mid July to late August, the pace of economic activity expansion in the United States slowed down and companies reduced recruitment, highlighting the reasons why the Federal Reserve will start cutting interest rates later this month.

The latest health check report from the Federal Reserve on the economy also shows moderate inflationary pressures, with all but one of the 12 regions believing that input costs have generally eased.

The economic activity in three regions has slightly increased, while the number of regions reporting flat or declining economic activity has increased from five in the previous report to nine in this report, "the Federal Reserve said on Wednesday in the survey report, known as the" brown book, "which surveyed business contacts of Federal Reserve banks in each region as of August 26. Employers are more selective when recruiting and are less willing to expand their workforce, citing concerns about demand and uncertain economic prospects

Federal Reserve Chairman Powell and his colleagues have made it clear that they plan to lower the Fed's benchmark interest rate from the current range of 5.25% -5.50% at the policy meeting on September 17-18, which has been maintained for over a year. The only uncertainty lies in whether the benchmark interest rate needs to be lowered by 25 basis points or a larger than normal reduction of 50 basis points in response to the weak labor market conditions.

According to this report, which is released approximately every six weeks, consumer spending in most areas of the Federal Reserve has decreased, and consumption has generally remained stable during the previous reporting period.

Federal Reserve Bostic warns against maintaining restrictive policies for too long, as it could harm the job market

Atlanta Fed President Bostic said on Wednesday that the Fed should not maintain excessively high interest rates for too long, as it could cause too much damage to employment.

In an article published on the Atlanta Fed website, Bostic said, "We cannot maintain a restrictive policy stance for too long

He said that waiting until the inflation rate actually falls back to the Federal Reserve's 2% target before reducing borrowing costs "will face the risk of labor market disruption and may bring unnecessary pain".

Bostic added that the recent report on price increases has strengthened his confidence that inflation rates are currently on a sustainable path back to the Federal Reserve's targets, and pricing pressures are rapidly and widely decreasing.

Bostic said that company contacts mentioned a slowdown in recruitment, but only a few contacts mentioned plans for layoffs.

I didn't feel like a collapse was about to happen, nor did I feel the panic among business contacts. However, data and our grassroots feedback indicate that the economy and labor market are losing momentum, "Bostic said.

The President of the Atlanta Fed also stated that it is too early to declare victory over inflation, and he and his colleagues must remain vigilant.

The interest rate futures market believes that the probability of the Federal Reserve cutting interest rates by 50 basis points and 25 basis points in September is close

Federal Reserve policymakers are increasingly focusing on the US labor market as they prepare for their policy meeting later this month, and their assessment of the health of the job market will be the key to determining the magnitude of interest rate cuts.

Analysts generally expect the Federal Reserve to stick to a 25 basis point rate cut as employers continue to recruit, albeit at a slower pace than before, and the unemployment rate, although rising, remains at a relatively low level of 4.3%.

However, after the data released on Wednesday, financial markets increased their bets on a significant interest rate cut by the Federal Reserve at its September 17-18 meeting. The interest rate futures market currently believes that the likelihood of a 50 basis point interest rate cut and a 25 basis point interest rate cut are close.

ZipRecruiter Chief Economist Julia Pollak wrote, "The report suggests that the labor market is cooling down, and the pace of cooling may be accelerating." She is one of the few analysts who believe that the Federal Reserve should start cutting interest rates in July.

Interest rate futures traders have increased their bets that the Federal Reserve will cut interest rates by 50 basis points at its September 17-18 meeting, raising the likelihood from 41% before the data was released to about 49%.

David Meger, head of metal trading at High Ridge Futures, said, "The data has changed people's expectations, and now it is expected that the probability of the Federal Reserve cutting interest rates by more than 25 basis points at the meeting will be higher

Meger added that the Job Openings and Labor Mobility Survey (JOLTS) by the US Department of Labor indicates that people expect the economy to begin to slow down, leading to a decline in the US dollar and a continued decrease in interest rates, which supports the gold market.

Federal Reserve policymakers have previously stated that they expect the monthly employment report to be released on Friday and next week's August Consumer Price Index (CPI) data to provide reference for their upcoming policy decisions.

The US dollar has fallen due to a decrease in job vacancies in the United States

The US dollar index fell 0.45% on Wednesday, closing at 101.29, hitting a near week low of 101.21 during trading. Previously, the July job vacancy data in the United States hinted at a softening of the labor market, further increasing the possibility of a significant interest rate cut by the Federal Reserve.

The weak US manufacturing data released on Tuesday has intensified market concerns about a hard landing for the world's largest economy.

The US dollar plummeted more than 2% against a basket of currencies in August, but with the increasing volatility in global financial markets and the growing demand for safer currencies, the US dollar has stabilized.

The US dollar has rebounded, but we dare not further rebound until we obtain more information, "said Brad Bechtel, global foreign exchange manager at Furui, in a report. After Friday's data is released, I estimate that the US dollar index will either be 100 or lower, or 104 or higher

Economists surveyed by Reuters expect Friday's report to show an increase of 165000 US jobs in August and 114000 in July.

Investors will also closely monitor Thursday's unemployment claim report.

US two-year treasury bond bond yield hit a 15 month low

The yield of US treasury bond bonds fell on Wednesday, and the yield of interest sensitive two-year treasury bond bonds hit a 15 month low, after data showed that the number of job vacancies in the US fell to a three-and-a-half year low in July.

The closely watched US two-year and 10-year treasury bond bond spreads also turned positive for the first time since August 5.

The yield of two-year treasury bond fell 10.5 basis points to 3.783% late Wednesday, hitting 3.772%, the lowest since May 2023.

The yield of 10-year treasury bond fell 6.6 basis points to 3.778% on Wednesday, after hitting 3.767%, the lowest since August 20.

Ian Lyngen, head of US interest rate strategy at BMO Capital Markets in New York, said, "The highlight of this week is Friday's employment report. This will largely provide us with the Federal Reserve's expected roadmap. Employment data has now overshadowed inflation, becoming the biggest risk to recent policy expectations

Traders believe that there may be a 237 basis point interest rate cut by the end of 2025.

According to the median estimate of economists surveyed by Reuters, the US unemployment rate is expected to drop from 4.3% in July to 4.2%.

technical analysis

From the daily chart, the gold price is still suppressed by the 5-day moving average, and the MACD and KDJ dead cross signals are still present. We still need to guard against further pullback risks in the gold price and continue to pay attention to the support of the Bollinger Bands' mid track. Currently, it is around 2475.26, and the key support is around the low point of 2470.69 on August 2. If it falls below this support, it may open a short-term downward channel.

Pay attention to the resistance near the 2500 level and the 10 day moving average of 2506.64. If it unexpectedly breaks through the 10 day moving average, it will increase the short-term bullish signal.