The geopolitical situation triggers the gold safe-haven to heat up, and the market pays attention to the US non-farm payroll report

Amid the geopolitical tensions, most investors are taking a wait-and-see approach. Many believe that rising interest rates may make more sense to hold dollars than gold. Fed policymakers said this week that the central bank will remain determined to raise interest rates to levels that more significantly dampen economic activity in a bid to tame inflation at its worst level since the 1980s. The U.S. dollar index rebounded sharply after hawkish comments from Fed officials, limiting gold's upside.

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Gold is considered a safe investment and tends to attract investors during times of economic and geopolitical turmoil. The CFTC tracks the futures positions of small speculators, large speculators such as fund managers, and commercial hedgers, including commodity-related companies. Gold's weekly movement since 2014, combined with data from the CFTC's trader report. When small speculators get too bullish on gold, it's often a signal that gold prices are about to top. Conversely, when small speculators are too bearish, gold tends to be near bottoms.

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The market focus turns to the U.S. non-farm payrolls data for July to be released on Friday (August 5). Tech giants have started discussions about halting hiring for the rest of the year, which would lead to a sharp drop in jobs. Investors estimate that the labor market added 250,000 nonfarm jobs in July, down from 372,000 in June, potentially driving gold prices sharply higher and providing more clarity on the Fed's response to stubbornly high inflation. Aggressive austerity policies.

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The tight supply and demand situation in the U.S. labor market will not change. The U.S. economy continued to send conflicting signals, with the tightest labor market in decades strongly pushing up labor costs in the second quarter, but the economy contracted for a second straight quarter. The Fed is trying to dampen overall demand to help reduce price pressures without triggering a spike in unemployment.

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Chicago Fed President Evans said he has lowered his economic growth forecast for this year to no more than 1%. But he added that he still thinks the Fed has a way to lower inflation while keeping the unemployment rate below 4.5%. St. Louis Fed President Bullard said the Fed was able to achieve a "relatively soft landing" to avoid a severe recession due to high borrowing costs, "The Fed appears to be able to push deflation methodically because modern central banks are more credible than they were in the 1970s. , achieve a relatively soft economic landing.”

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Minneapolis Fed President Kashkari said on Wednesday that the chances of the Fed turning to a rate cut in 2023 are highly unlikely. “Some financial markets are showing that they expect us to cut rates next year. I don’t want to say that’s impossible, but it now looks like a very unlikely scenario given what I know about the dynamics of core inflation. More likely The scenario is that we continue to raise (interest rates) and then stay where we were then until we have a lot of confidence that inflation has come down well to 2%.

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According to the forecast of 24 large investment banks, the major investment banks believe that the non-agricultural growth rate will further decline in July, but there is a large gap between the growth expectations among investment banks. Specifically, the U.S. non-agricultural employment growth is expected to be between 150,000 and 300,000 after the seasonal adjustment in July (previous value was 372,000), the unemployment rate is expected to be between 3.5% and 3.7% (previous value is 3.6%), and the average hourly wage is expected to increase at an annual rate. Expected to be between 4.9%-5.0% (previous value 5.1%).

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Compared with the previous value, the investment bank believes that the non-agricultural growth rate further declined in July. In contrast, the unemployment rate and the annual average hourly wage rate are not much different from the previous value. If data shows that non-farm growth in July really fell as investment banks predicted, gold is expected to find support.