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Analysts: there is still room for gold prices to rise.
Sep 7,2020 08:28CST
translation
Source:Futures daily
The content below was translated by Tencent automatically for reference.

SMM News: September 4, the market attention of the United States in August non-farm payrolls data released. Earlier, Federal Reserve Chairman Colin Powell said at the annual meeting of the global central bank in Jackson Hole that the Fed paid more attention to employment in its two major goals of employment and inflation. The August non-farm payrolls data is a key reference for assessing the recovery of the US job market on the eve of the Fed's September interest rate meeting, which will play a vital role in guiding the direction of the Fed's monetary policy.

According to the latest data from the Labor Department, non-farm payrolls in the United States increased by 1.371 million in August, slightly lower than the expected increase of 1.4 million, but still recorded a sharp rebound for the fourth month in a row, while the previous value was revised to an increase of 1.734 million. It is worth noting that the US unemployment rate fell to 8.4 per cent in August, better than the expected value of 9.8 per cent, compared with 10.2 per cent. The US unemployment rate fell for the fourth month in a row and fell to single digits for the first time since March. At the same time, US wages rose 4.7 per cent in August from a year earlier, up 0.4 per cent from a month earlier, better than the market had expected. In addition, the labour force participation rate rebounded slightly and the average weekly working hours increased.

The increase in employment in August mainly reflects a large number of temporary hiring by US authorities as a result of the 2020 census, according to the Labor Department. According to itemized data, the number of people out of work in the United States for 15 weeks or more rose to 8.14 million, and the proportion of the labor force rose to 5.1%, the highest level since the financial crisis in 2008. In addition, the number of permanent unemployed in the United States rose by about 500000 to 3.4 million, the highest level since 2013.

Shi Jialiang, a researcher on precious metals and foreign exchange in founder medium-term Futures, said that the unemployment rate in the United States in August fell much more than expected, the labor force participation rate increased, and the average weekly working hours increased, reflecting the overall improvement in non-farm data in the United States. "of course, it should also be noted that job growth slowed further in August, the number of permanent unemployment increased, and the expiration of various government relief programs had an impact on the job market. at the same time, the market still questions the sustainability of the economic recovery from the deep recession caused by the epidemic, and the authenticity of the falling unemployment data." He added.

Du Fei, precious metals analyst at Jinrui Futures, believes that the industries with more obvious improvement in employment this time are government employment, retail and commercial services, indicating that the industries more affected by the COVID-19 epidemic have recovered better. However, from a structural point of view, the number of permanent unemployment is still on the rise, and the new job creation is mainly due to the decrease in the number of temporary unemployed.

The Fed will revise its economic forecasts at its interest rate meeting on September 15-16. Given that the Fed's two major missions are price stability and full employment, the August non-farm payrolls report may force the Fed to revise its view of the job market.

After the release of the US non-farm report, Federal Reserve Chairman Colin Powell affirmed the employment data for August, but still judged that the future economic recovery would not be smooth, which was consistent with Boston Fed Chairman Rosengren's statement that the Fed would not withdraw its loose monetary policy. Therefore, at the upcoming interest rate meeting in September, the Fed will be dovish on the economy, but it will be difficult for monetary policy to ease further in the short term. The Fed will maintain the current pace of asset purchases and will strengthen the expectation that interest rates will not be raised in the short term. " Said Xu Ying, a precious metals and foreign exchange analyst at the East Securities Derivatives Research Institute.

Powell said at the annual meeting of global central banks that he put employment before inflation, which fully reflects the importance that the Federal Reserve attaches to employment. " Du Fei believes that before reaching the level of full employment that the market believes, the Fed will not tighten monetary policy too quickly, but will adjust flexibly according to the situation, taking into account the Fed's statement that it will tolerate inflation "moderately" higher than 2%. Therefore, while the unemployment rate is still relatively high, the Fed will maintain a loose policy for a long time to promote full employment.

After the release of the non-farm payrolls report, the prices of assets such as precious metals, US Treasuries and US stocks all fluctuated considerably, with the dollar index rising nearly 50 points in the short term to a daily high of 93.24, while spot gold prices plunged nearly $32 in the short term to a new daily low of $1916.20 / oz.

With regard to the gold market, Xu Ying said that the recent consolidation of international spot gold prices at 1900mur2000 US dollars / oz showed no obvious upward momentum, mainly because the current market has priced the expected recession in economic fundamentals, but fiscal and monetary policy have not advanced as fast as expected. at the same time, the risk aversion of the market still supports the gold price, so the gold price as a whole shows an oscillating trend. In her view, gold will continue to oscillate in the short term.

Shi Jialiang believes that the higher-than-expected economic data in the United States put pressure on gold prices in the short term, but can not change the long-term upward trend of gold. Under the influence of many factors, such as global super quantitative easing, negative real interest rates and the persistence of a weak dollar, the price of gold still has room to rise because of its risk aversion and anti-inflation properties.

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