We saw the decline in which the price of gold was affected and the tangible rise in gold prices, reaching levels of $ 1834 per ounce, immediately after the release of the US labor market data for the month of 8, where the most important of these data were:
– (Non-Farm), which showed that the US economy added 243 thousand jobs in August, as it was expected to add 750 thousand jobs, and the echo of this negative statement on the dollar was very large
The unemployment rate in the United States, which matched expectations at a level of 5.2%, where the previous reading was at 5.4%, and this rate, which matches expectations, negatively affected the dollar index and could not equal the impact of the negative and disappointing job news.
The US labor market report on Friday had secondary data that negatively affected an indicator such as wage inflationary pressures and the non-farm unit labor productivity statement, which was also less than expected.
This was a review of the most important market drivers at the present time, which contributed to what happened in the trading session on Friday of the decline in the dollar index and thus the decline of the US dollar against the basket of other major currencies and the rise in gold prices to show you the importance of the American labor market report and its data and the extent of their impact on the markets Especially these days and the following days, as I see that the US labor market data is mainly controlling the markets at these times, and I see that its impact will be greater in the later periods.
And to confirm this view, we must recall a little some important economic statements. Let me go back a little bit in time, specifically the words of Jerome Powell at the Jackson Hole forum, where he said that it might be appropriate to start tapering off this year and the Fed expects to see additional progress In the recovery of the labor market in the coming months, and we, as traders and investors, understand from this talk that they focus on the labor market numbers to know the extent of the recovery of the American economy, and that these data are among the constants of their goals that they follow with great accuracy and are waiting for the release of many of them with strong numbers before taking the expected tightening step.
I will present to you some of the statements of the members of the US Federal Reserve that may give us an overview and a clearer picture of the possibility of starting to tighten and ending the easy policy:
“My priority is to reduce asset purchases and then consider raising rates when the time comes, and I want the tapering process to be easy and the tapering to be complete by mid-2022,” said Harker, president of the Federal Reserve Bank of Philadelphia.
– His colleague Robert Kaplan, Chairman of the Federal Reserve in Dallas, said: “The Fed has met the tapering criteria and despite the concerns – Delta – but with the availability of vaccines things are different now.”
Atlanta Fed President Rafael Bostic said: “It would be reasonable to scale back the bond-buying program before the end of the year if US job gains continue.”
– And don’t forget the words of Esther George, President of the Federal Reserve Bank of Kansas City, who said, “The Fed should start reducing bond purchases this year.”
We deduce from these statements that they see that achieving their goals is not far away and that they focus greatly on the numbers (the labor market), which is an important mainstay in their goals, and although Jerome Powell did not give a specific time to start with that, he shared the idea with them, which puts all the focus On the upcoming Fed meetings before the end of the year, the next meeting will be on Wednesday, September 22nd, which will obviously focus on it.
A questioner may ask: You started talking about labor market data, and you are now talking about another axis. happened.
It invites me to put the US labor market reports and figures for the last quarter of this year in my top priority, and from my comprehensive study of what was released of these data, I see that the Fed will delay imposing the implementation of the strict policy until the end of this year, and this will be based on the issuance of satisfactory data in the US labor market report For decision makers in the Fed, and there will be statements from decision makers about this in the next Federal Reserve meeting 21-22 / 9, and we may also see some optimistic statements about the economy, which will support the dollar index, but without an actual approval to reduce quantitative support in this meeting, as I expect the actual to be near the end of this general.
As for speculation in this period, we must take into account the corrective movements on the assets, and we, as traders, must be extremely cautious and not trust the general trend and that the flexibility in trading is present, my dear followers, and rely mainly on the strongest centers of support and resistance during trading because this period From a decisive year, and based on the foregoing, we will see some strong price fluctuations and price corrections on the prices of currencies, indices, metals and stocks.
We have to believe that the price factory in front of me on the screen and its most important drivers are the economic statements and statements in general and in particular in light of these circumstances that the economies of the major countries are witnessing, the most important of which is the American economy.
Therefore, I wish everyone to be ready, ready, and follow up closely, with my sincere wishes for abundant profits, and may God protect and take care of you.
Financial and technical analyst
Abdul Rahman Al Asfar