Relying on the CD Markets global fund monitoring system, the Federal Reserve's policy response function model and the cross-asset pricing framework, we conduct full-chain cross-verification of U.S. July employment data, Federal Reserve policy expectations re-evaluation and global gold market capital movements to form a systematic study and judgment, penetrating the market's short-term sentiment to grasp the essence of the market.

In-depth dismantling of July's non-agricultural data: Seasonal disturbances are superimposed and marginally weakened, and the signals need to be dialectically screened

The number of U.S. non-farm payrolls unexpectedly fell by 23,000 in July, significantly lower than market expectations of 80,000 new jobs. At the same time, the employment data from May to June was revised downward by 103,000, highlighting the cooling signal of the job market. However, the data shows obvious structural contradictions: the unemployment rate bucked the trend and fell to 4.1%. The core driver came from the continued decline in the labor participation rate, rather than the endogenous resilience of the job market. The CD Markets research team did not stop at the extreme interpretation of superficial data, but conducted a hierarchical dismantling of the employment structure:

The main contribution of short-term disturbance terms is:Local government education departments laid off 53,000 people due to seasonal layoffs due to the end of the school year, coupled with the fall in leisure and hotel industry jobs after the World Cup fever subsided, which is the core drag on the weakening data; after excluding such seasonal factors, the private sector still maintains weak positive growth.

The underlying trend does have a marginal slowdown:The "lack of summer momentum" phenomenon that has occurred for three consecutive years has once again been verified. The momentum of employment expansion has significantly converged compared with the first half of the year, and wage growth has slowed down simultaneously, which has alleviated concerns about the wage-inflation spiral to a certain extent.

Overall, this non-farm payrolls is not a signal that the job market is turning colder overall, but it is enough to break the previous unilateral expectations of "a strong economy and no danger of raising interest rates" and provide key data support for the dovish camp of the Federal Reserve.

Expectations for interest rate hikes in September have cooled rapidly, and CPI is the ultimate basis for determining policy direction.

Based on our Fed policy response function model calculations, after the release of this non-agricultural data, the market’s pricing for a 25bp interest rate hike in September has quickly dropped from 55% before the data to 44%, and the phased peak of tightening expectations has been reached. We judge that the baseline scenario for the September meeting has shifted from “increasing interest rates” to “maintaining interest rates unchanged”, but the final implementation still needs to be confirmed by inflation data next week. CPI will be the core anchor for policy expectations and asset pricing in the next stage.

However, we emphasize that the Fed’s decision-making is not driven by a single variable, and a single employment data is not enough to reverse the policy course. The current market has rapidly shifted from "certainty of interest rate hikes" to "interest rate cut games", and the sentiment swing is suspected of being excessive: on the one hand, inflation stickiness is still the core constraint of the Federal Reserve. If the CPI data next week rises more than expected, even if employment weakens, internal hawks will still have sufficient reasons to raise interest rates; on the other hand, the Federal Reserve is currently in a policy observation period and prefers to accumulate multiple sets of data before making a direction choice, rather than making a rash change based on single-month data.

Gold begins a rebound, and multi-dimensional financial signals simultaneously verify the resurgence of bulls

Driven by the fall in the U.S. dollar index, the stabilization of high 10-year U.S. Treasury yields, and the cooling off of tightening expectations from the Federal Reserve, gold prices rose more than 7% in a single week, recording the largest weekly increase in more than six months, and successfully held the key support level of $4,000 per ounce. Relying on the CD Markets global capital flow monitoring network, we have observed that multiple levels of funds enter the market simultaneously, and the rebound has solid financial support:

Derivatives market sentiment turns rapidly:The SPDR Gold Trust (GLD) call options bought nearly US$100 million in a single day, four times the put options; the gold mining stock ETF (GDX) call options bought more than US$80 million, with trading volume four times the usual, showing that leveraged funds are rapidly betting on the rise in gold prices.

Institutional funds continue to add positions:CFTC position data shows that the gold net long positions of hedge funds and asset management institutions have risen to a new high in more than six months. Institutions generally regard the current price range as a layout window with a safety margin.

China’s retail funds have become a marginal catalyst:Domestic gold ETFs have continued their longest continuous inflow record since March. The concentrated buying of Chinese retail investors has become an important marginal driver of this round of gold price bottoming out. This is also an incremental capital dimension that most institutions in the market tend to ignore.

Research conclusion

The current market interpretation of gold's rebound mostly stays at the single attribution level of "non-agricultural good", and it is easy to fall into linear judgments driven by emotions. Relying on the macro data, policy models and fund monitoring system covering the entire site group, CD Markets has achieved full-link verification of "employment data → policy expectations → cross-market funds → commodity pricing", which can not only clearly identify the driving logic of short-term rebounds, but also clarify the core verification points of subsequent market trends.

Our conclusion is: Gold is currently in the rebound window brought about by the restoration of tightening expectations. The short-term upward momentum is still there, but the sustainability of the market is highly dependent on the performance of next week's CPI data; if inflation is confirmed to fall, gold is expected to start a trend restoration, otherwise there is still the risk of repeated shocks.