Nonfarm Payrolls in Focus: Will Gold Hold as Equity Indices Reassess?

Following last weekend’s Jackson Hole symposium, Fed Chair Kevin Warsh delivered a relatively hawkish message, prompting the market to reassess and reprice the timing of U.S. interest-rate hikes. According to the current FedWatch data, the probability of a rate hike at the end of September is slightly above 50%. This implies that the next round of nonfarm payroll and inflation data to be released next month could play an important role.

From a data perspective, the probability of a rate hike surged by nearly 20 percentage points within just one week, driven entirely by Warsh’s remarks rather than by any other major economic data releases. However, based on historical experience, only probabilities above 70% tend to produce near-certain outcomes. With the current probability still below 60%, if this level persists, the day of the FOMC meeting could turn out to be highly uncertain. Over the past several years, most policy decisions have been largely anticipated and priced in by the market in advance; a genuine 50/50 situation has not been seen for quite some time.

That said, there is still roughly one month remaining before the decision point, and a large number of important economic data releases and other variables could influence the subsequent path. If U.S. economic data again significantly miss expectations, the priority for a rate hike could be pushed back once more to year-end.

One particularly important point to note is that Warsh’s emphasis on bringing inflation back down to the 2% target appears increasingly unrealistic in an environment where high oil prices are stabilizing. Simply using rate hikes to suppress inflation is likely not only ineffective but could also amplify other problems.

Regardless of the Federal Reserve’s ultimate decision, the broader market trend and direction are unlikely to change. Any rebound or rally in risk assets will still face challenges from multiple risk factors in the fourth quarter. If a rate hike occurs at the end of September, it would at most bring the timing forward by roughly one month; conversely, not hiking does not guarantee that the market can rest easy.

In the short term, this week’s nonfarm payroll data will be worth watching. The market has once again returned to a situation in which weak data are supportive of risk assets, while strong data increase the probability of a rate hike and weigh on prices.

In terms of price action, the bearish sentiment from last weekend and early this week has largely been realized. Although some extension of the current move remains possible, the probability of the market entering a choppy, range-bound phase is still higher than that of a fresh trend resumption.

The key indicators to watch remain the leading asset class (crypto), the long-term outperformer (U.S. equity indices), as well as gold and crude oil. If gold and Bitcoin reverse sharply lower and the Nasdaq breaks below its previous low, this would signal that bearish sentiment is broadening. Conversely, if this week’s nonfarm payroll data are strong enough to stabilize risk assets and extend the rebound, this could represent a final wave of recovery. Once this move is complete, it could offer an excellent opportunity to sell at relatively elevated levels.

Crude oil remains in a similar situation to last week, on the verge of a breakout. The long-term bullish view is unchanged, but the move may depend on catalysts from news flow. In addition, crude oil still exhibits a negative correlation logic with most other assets.$纳指100ETF(QQQ)$ $纳斯达克(.IXIC)$ $NQ100指数主连 2609(NQmain)$ $微型NQ100指数主连 2609(MNQmain)$ $标普500ETF(SPY)$ $标普500(.SPX)$ $SP500指数主连 2609(ESmain)$ $微型SP500指数主连 2609(MESmain)$ $标普500波动率指数(VIX)$ $道琼斯指数主连 2609(YMmain)$ $微型道琼斯指数主连 2609(MYMmain)$ $道琼斯(.DJI)$

This Week’s Trading Strategy

• Euro futures (long): The previously initiated long position was executed at 1.1420. As the recent move has developed, the stop-loss has been raised to 1.1570. The price targets remain unchanged at 1.1770 and 1.2420 (allocated equally, 50% each).本週的策略上，之前做多的歐元期貨成交於1.1420，隨著近期的行情啟動，止損此前已經上修至1.1570。目標不變，設置於1.1770和1.2420（分別一半）。 $欧元主连 2609(EURmain)$

• Crude oil (long): The long position is maintained with an average entry price of 75. The stop-loss has previously been adjusted back to the entry level to ensure a risk-free position (in practice, a level just below 74 may be more consistent with sound trading logic). The price targets remain unchanged at 95 and 115 (allocated equally, 50% each).$WTI原油主连 2610(CLmain)$ $微型WTI原油主连 2610(MCLmain)$

• Gold: The intended short position was not executed. However, the preference remains to look for shorting opportunities. Limit sell orders are maintained at 4,830 and 5,170 (allocated equally, 50% each), with a stop-loss at 5,275 and a target at 4,000. New this week: A lower-level long limit order has been added: buy limit at 4,265, with a stop-loss at 4,065 and a target at 4,765. This long limit order is valid only for the current week. $黄金主连 2612(GCmain)$ $微黄金主连 2612(MGCmain)$ $1盎司黄金主连 2612(1OZmain)$ $黄金ETF-SPDR(GLD)$

P.S. If the first price target is reached on any trade, the stop-loss will automatically be adjusted to the entry level. Any adjustments following execution will be updated in subsequent articles.