The Job Openings and Labor Turnover Survey (JOLTS) report released by the U.S. Department of Labor on Tuesday showed that the number of job vacancies in July was 8.827 million, declining for the third consecutive month. The main employment data in July began to approach pre-epidemic levels. This is a sign of the job market. A sign of cooling that labor market pressures are easing. The report shows that 2.3% of non-agricultural employees resigned in July, which was lower than the 3% resignation rate during the “big resignation” caused by the epidemic. This indicator is the lowest since January 2021. Last month’s hiring rate was the lowest since April 2020. Weak U.S. labor market data cast doubt on the possibility of the Federal Reserve raising interest rates again in the future.

Data showed demand for labor fell and hiring eased, which the Fed said was necessary to continue lowering inflation and easing pressure to raise wages. Policymakers hope that this adjustment will not result in a sharp rise in unemployment.

“According to JOLTS, all indicators point to a decline in the labor market across the board, whether it’s resignations or job vacancies,” said Will Compernolle, macro strategist at FHN Financial in New York. “JOLTS is also forward-looking. When resignations go down, that means Wage pressure will be reduced in the future.”

Ben Jeffery, U.S. rates strategist at BMO Capital Markets in New York, said the data undoubtedly reduced the likelihood of rate hikes in September and November. “It’s probably too early to draw very clear conclusions. What we took away from Powell’s speech last Friday was that data-dependence remains the overarching theme,” he said, referring to the Fed chairman Powell spoke last week in Jackson Hole, Wyoming.

After the data was released, market expectations for the Federal Reserve to raise interest rates this year have cooled down. According to the CME FedWatch tool, traders currently believe that the probability of the Fed keeping interest rates unchanged at the September meeting is 86%, which is higher than the 78% before the data is released; the probability of the Fed raising interest rates in November is expected to drop to 50%, lower than the data 61.2% before, but higher than 46% a week ago.

Analysts at Action Economics noted that these data “increased confidence that the Federal Reserve will not raise interest rates at its upcoming September 19-20 policy meeting and, in fact, may have already ended.” The economy has shown resilience when it comes to interest rates, but investors remain wary of any signs of the lagging impact of monetary tightening. Investors have raised bets that the Federal Reserve may continue to raise interest rates or keep them high for longer as it tries to bring inflation closer to its 2% target while the job market remains tight.

The U.S. dollar also weakened sharply as a result. The U.S. dollar index fell 0.52% on Tuesday, the largest one-day drop since July 13. It hit an intraday low of 103.36 on Tuesday, a new low since last Thursday, and closed at 103.46. The U.S. dollar index rebounded slightly on Wednesday and is currently trading around 103.58. The top focus is on the resistance near the 5-day moving average of 103.84.

However, Bipan Rai, head of North American foreign exchange strategy at CIBC Capital Markets in Toronto, pointed out that compared with other central banks, the market may digest too many interest rate cuts by the Federal Reserve in 2024, and traders’ repricing of this probability may further boost the dollar. “That tells me that, at least in the short term, the dollar still has some room to rise.”

In terms of U.S. bond yields, the two-year Treasury yield, which reflects interest rate expectations, fell 4% on Tuesday, which was also the largest one-day drop in the past month and a half, to 4.886%. The intraday low hit a three-week low of 4.871%, which was hit on Monday. Eight-week high. The 10-year U.S. Treasury yield fell 2.3% to 4.122% on Tuesday. It hit an intraday low of 4.107%, the lowest since August 11. At present, the short-term technical view of U.S. bond yields is biased toward short positions, and is also biased toward a bullish outlook for gold.

Jim Wyckoff, senior market analyst at Kitco, said subdued job openings and consumer confidence reports suggested the Federal Reserve may not raise interest rates as previously expected, which helped gold and some short covering.

Spot gold fluctuated within a narrow range on Wednesday, currently holding around the 1936 price position, not far from the nearly three-week high of 1938.04 set overnight. On Tuesday, the price rose as much as 0.9%. The U.S. dollar and U.S. bond yields plunged sharply, helping gold prices surge by more than $15, breaking through the key position of the 55-day moving average and setting a new high in nearly three weeks. The short-term bullish signal for gold has further strengthened, and the market outlook is expected to further increase. The resistance near the 100-day moving average of 1957.74 is tested. Data from SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund (ETF), showed on Monday that its gold holdings rose 0.3%, also reflecting market sentiment.

Investors are currently awaiting the U.S. personal consumption expenditures (PCE) price index released on Thursday and the non-farm payrolls data released on Friday, which will provide further clues about the direction and strength of the U.S. economy. This trading day will usher in the U.S. ADP employment data for August, commonly known as “small non-agricultural employment.” The market expects ADP employment to increase by 195,000 in August, down from 324,000 in July. This expectation is slightly bullish for gold prices.