Everbright Futures: Non-agricultural data is released, and the short-term trend of gold prices continues

Last week, COMEX gold prices rose by 4.52% to US$2,186.20 per ounce, and Shanghai Gold rose by 4.65% to 506.28 yuan per gram.

In terms of economic performance, last week’s economic data gathered together, mostly weak. In terms of economic operation, the U.S. factory orders monthly rate, wholesale sales monthly rate, trade account and February ISM non-manufacturing PMI were all lower than expected, with varying degrees of decline, and the decline is difficult to change. On the employment side, the job market is mixed with bulls and bears. The number of new non-agricultural jobs after season adjustment in February was 275,000, a new low since November 2023. However, the new non-agricultural employment data in December and January both improved. After a downward revision, the total number of people decreased by 167,000 compared with before the revision. In addition, the unemployment rate in the United States in February hit a new high since January 2022. The number of initial jobless claims in the United States in the week to March 2 and the number of layoffs by challenger companies in February also increased to varying degrees. The January data on US JOLTs job vacancies, a labor market indicator that Yellen attaches great importance to, fell back. Although the number of new non-agricultural jobs increased in February, the previous non-agricultural data was revised downwards, coupled with the weak performance of unemployment rate and other data, making the overall employment performance relatively sluggish.

In terms of the stance of Federal Reserve officials, Fed officials expressed their stance closely last week, and "dove voices" were everywhere. Regarding the possibility of interest rate cuts, Federal Reserve Chairman Powell said that he will not seek a target for inflation to fall back to 2% before starting to cut interest rates. There is the possibility of significant interest rate cuts in the next few years. Regarding the tone of monetary policy, official Mester expects interest rates to become less stringent as inflation declines this year. Regarding the number of interest rate cuts, officials Williams and Mester reiterated that three interest rate cuts this year are reasonable options. Regarding the timing of the opening of the interest rate cut window, official Collins said that one should not draw premature conclusions on whether to cut interest rates in May, while official Bostic stated that the first interest rate cut would be carried out in the summer. The overall stance of the Federal Reserve officials was dovish, boosting market expectations for interest rate cuts.

Taken together, although the unexpected non-agricultural data in February put pressure on gold prices to a certain extent, many weak economic data may pave the way for an interest rate cut. The swap market is fully pricing in the Federal Reserve's decision in June. With the interest rate cut by 25 basis points and the Federal Reserve's dovish bias, gold prices are expected to remain strong in the short term. Pay attention to the February CPI and PPI data to be released this week.