Spot gold has fallen back, and bears welcoming the September non-agricultural month of the United States; but it does not report much hope

On Tuesday (October 5), spot gold fell from its highest point of $1,770.44 per ounce since September 23, which was set overnight, as the US dollar index regained strength, which is expected to end the daily three consecutive negatives. The risk of US debt default has put pressure on the stock market and supported the safe-haven dollar. Investors are waiting for the September non-agricultural employment report to be released this weekend.


At 20:21 GMT+8, spot gold fell by 0.56% to US$1759.77 per ounce; the main COMEX gold contract fell by 0.42% to US$1760.1 per ounce; the US dollar index rose by 0.12% to 93.924.

The debt ceiling continues to raise concerns

U.S. President Biden said on Monday that unless Republicans and Democrats vote to approve an increase in the debt ceiling in the next two weeks, the federal government may exceed the $28.4 trillion debt ceiling and default on an unprecedented level. "In the end, the increase in the debt ceiling It is to pay off the debts we already owe...not any new debts."

Concerns about the debt ceiling caused US stocks to plummet overnight and supported the end of the dollar's correction. In a report, ING strategists said: "The U.S. dollar started the week badly... but the market continued to buy when the U.S. dollar fell. This seems to have happened overnight (Biden called on the Democrats to cooperate), and the U.S. dollar subsequently rebounded across the board."

Biden pointed out that the United States has accumulated nearly $8 trillion in new debt during the four years of Trump's administration, which is more than a quarter of all outstanding debt. He said that during Trump's administration, with the support of Democrats, "Congress Republicans raised the debt ceiling three times."

Senate Republicans headed by McConnell have twice blocked actions to raise the debt ceiling in recent weeks. When asked if he can guarantee that the United States will not exceed the debt ceiling, Biden replied, "No, I can't. It depends on McConnell." He said he planned to talk to McConnell on this matter.

McConnell said in a letter to Biden that the Democrats do not need the cooperation of the Republicans to pass a bill to raise the debt ceiling. He wrote that nearly three months ago, the Democrats had been notified that they knew the Republicans' position on this issue.

At the end of last month, the U.S. House of Representatives passed a bill extending the suspension of the U.S. debt ceiling until the end of 2022. The bill has now been sent to the Senate, and the Senate is expected to vote on the bill this week. Schumer said on Monday that later this week, the Senate will vote for the third time on the proposal to suspend the debt ceiling.

Non-agricultural materials meet the Fed's start to withdraw from the standard

The number of non-agricultural employment in the United States in September is expected to show continued improvement in the labor market. The market is expected to add 470,000 new jobs, far exceeding the previous increase of 235,000. This is enough for the Fed to start reducing the scale of debt purchases before the end of the year.

The Federal Reserve's federal unemployment relief measures ended in September. At least 6.5 million people can no longer receive federal unemployment benefits, but it is not clear how many of them will return to the US labor market to find work. The new crown epidemic has given millions of people choose to retire early, and the ever-stronger stock market has also made it easier for them to make this decision.

The number of job vacancies in the United States hit a record high. The number of jobs is still 5 million below the pre-crisis level-this does not include the millions of additional jobs that might be added if there were no pandemics at all. Most companies say that even if they offer higher salaries, it is not easy to find suitable candidates.

Some people began to wonder whether the labor force has undergone permanent changes, and the labor participation rate has declined irreversibly. Atlanta Fed President Bostic pointed out that the labor market is currently in a state of turbulence, and "a lot of people are thinking about these issues."

According to the rating agency Moody's, the risk of debt default in the world's largest economy, superimposed inflation may last longer, or cause US economic activity to shrink by nearly 4%, a sudden drop of 6 million jobs, and a renewed unemployment rate. Rose to 9%.

The market is preparing for a good employment report, which will meet the Federal Reserve's criteria for reducing debt purchases. But the market must see a truly amazing number before gold can fall below the low of $1,721.76 since August 10, 2021 touched last week.

Inflation will remain high

St. Louis Fed President Brad said on Monday that for the first time in years, American companies have encountered no problems in raising prices to customers. While the market is worried that expectations of high inflation have become entrenched, he warned that inflation may remain high for some time to come.

Brad said at an event held by the International Economic Forum of the Americas that corporate contacts in his Fed region and across the country usually said, "Don't worry, my company will be profitable because I want to increase the price, and we are here. There is no difficulty in raising prices in this environment."

Brad is one of the strongest supporters in the Federal Reserve that believe that positive measures should be taken to curb higher-than-expected inflation. He believes that two interest rate hikes are needed in 2022. At present, interest rates are still at a level close to zero, which has been at this level since the outbreak of the new crown pandemic in early 2020.

Brad added: "What I want to say is that I am concerned about the changing mentality around economic prices and the relative freedom of companies that can easily pass on the increased costs to customers. This has not been the case for many years."

Although the market generally believes that the U.S. dollar will rise further-speculators are pushing net long bets to their highest level since March 2020-TD Securities warns that the upside may be limited.

Mark McCormick, global head of foreign exchange strategy at TD, wrote in a report: "Although the U.S. dollar has tended to rise recently, we are cautious about investors continuing to chase more at the current level... There have been many unfavorable global news reflected in the U.S. dollar. In the coming weeks, the market will need to make choices about the risk factors that have been bet on and how these factors work."

Spot gold is supported at $1744 below

On the daily chart, the price of gold has started a three-wave downward trend from US$1770, and the support below looks to the 23.6% target of US$1744. Wave 3 is a sub-wave of the downward (3) wave that started at $1834. (3) Wave is a sub-wave of the downward ((Y)) wave that started from 1917 USD. The ((Y)) wave belongs to the adjusted IV wave that started at $2,075.