Gold Reaches New All-Time High As US Labor Market Softens Further
Mounting evidence that the US labor market continues to soften has helped gold to make yet another fresh all-time high this morning.
In July, there were 7,181,000 job openings in the US economy (with double/triple counting taking place), a ~250,000 reduction in job openings from June and 200,000 below consensus expectations.
Layoffs continue to rise, with another large revision higher to the June layoffs number:
The trend in US labor market data is very clear at this point. I believe the question is starting to become whether the Fed is too far behind the curve on labor market deterioration to be able to turn the tide before recession becomes inevitable.
A 25bps rate cut from the Fed in two weeks is now a 99% probability, but another conspicuously weak monthly non-farm payrolls report on Friday (with downward revisions to June and July numbers) will open the door to a deeper conversation about the possibility of a 50bps cut.
At this point, the baseline scenario is for a 25bps rate cut at each of the FOMC’s next four meetings (September, October, December, and January), followed by a marked reshaping of the voting members of the FOMC in early 2026.
By March 2026, the FOMC is likely to have a significantly different voting composition due to the 2024 election’s impact on Fed appointments, the end of Chairman Powell’s tenure, the annual regional bank rotation, and potential mid-term resignations. Together, these could shift the balance of power inside the Fed and meaningfully alter its policy stance to a much more dovish posture preferred by Trump 2.0.
Gold (Daily)
Historically, the most bullish periods for the gold price have been when the Federal Reserve is behind the curve and struggling to catch up with rapid changes in the economic outlook.
Sort of like right now.
After a multi-month consolidation, the chart pattern breakout to new all-time highs in gold is a sight to behold. Meanwhile, I am still of the opinion that I want to own more gold than ever before. The price is higher, bullish sentiment is growing stronger, but we’re still not ‘there’ yet.
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