Weekly

U.S. President Trump hopes Russia and Saudi Arabia will cut production by 10 million barrels of crude oil, stimulating oil prices to soar by more than 30 percent, becoming the focus of the market and masking the unfavorable performance of the U.S. labor market.

Gold prices have risen above 1600, but new non-agricultural jobs and unemployment in the United States are the focus of the week tonight, and the labor market is bound to deteriorate, which is likely to cause market volatility again.

Last night, the United States announced that the number of people applying for unemployment assistance for the first time in the week ending March 28 was 6.668 million, far higher than the expected 3.5 million. The previous value was revised from 3.283 million to 3.307 million.

The number of people broke the record again, which may mean that the recession that the market is most worried about has already come.  If the epidemic situation is not effectively controlled, there will be more warning signals in the US job market.

This will not be conducive to the atmosphere of the big market. The US labor market is beginning to reflect the impact of the epidemic. The US dollar will continue to play its role as a financial haven.

Tonight, the United States will release the March non-farm employment report. At present, the market generally expects that the number of non-farm employment will decrease by 100,000, which will be the first non-farm employment report with negative increase in nearly 10 years.

However, the data may still be affected by the lag effect or may not reflect the decline in jobs, as the survey was conducted before the massive blockade.  Other analysts pointed out that,

Even if the first negative non-agricultural employment report in nearly 10 years does appear, the market may not experience the expected earthquake.  The suspension of US economic activity has been reflected in a number of figures.

(As before, the number of jobless claims and the monthly rate of industrial output, etc.), the timeliness and effectiveness of non-agricultural services are not as good as before, and the market has already digested the relevant expectations.

In addition, the current policy of the Federal Reserve is not determined by employment and inflation data. Resisting the economic impact of the epidemic is the top priority of the Federal Reserve. The impact of non-agricultural data on the future policy direction of the Federal Reserve is not the same.

If only a decrease of about 100,000 is recorded as expected, there may not be much shock to the market.

However, if there is a sharp cut in non-agriculture, which is much lower than expected, I am afraid it will greatly scare the market.  I believe gold may continue to play an important role in investor allocation in the next few months.

However, volatility will remain quite high.  The prolonged economic weakness and signs of increasingly aggressive stimulus measures by governments and central banks should provide some support for gold.

The holding of SPDR Gold Trust, the world's largest gold-backed listed trading fund, rose 0.18% to 968.75 tons, the highest level since October 2016, reflecting market sentiment.

According to data compiled by Bloomberg, investors increased their holdings of gold ETF for eight consecutive trading days as of Wednesday, the longest since February, when ETF gold holdings increased by 5 tons to 2,821 tons.

Gold was sold off because investors needed liquidity after the stock market plummeted. Without further decline in the stock market, gold also rebounded.  But once the stock market drops again, gold may be dragged down again.

Gold is an asset that can hedge against uncertainty, whether it is macroeconomic uncertainty, geopolitical uncertainty or uncertainty like this epidemic.  Gold is an excellent safe haven asset.

In case of uncertainty, gold will perform better than other assets.