The non-farm payroll report revealed two opposing sentiments, with gold prices surging and then retreating as it battled for the 4300 level. When will the counterattack begin?
2025-12-16 21:50:35
On Tuesday (December 16) at 21:30 Beijing time, the U.S. Bureau of Labor Statistics released the delayed October and November non-farm payroll reports, as well as October retail sales data. Due to the previous government shutdown, the simultaneous release of these two months' worth of employment and consumption data was seen as an attempt by the market to find clear clues about the momentum of the U.S. economy and the direction of the Federal Reserve's policy.
Data shows that U.S. nonfarm payrolls increased by 64,000 in November, better than the market expectation of around 50,000; however, the October figure was significantly revised down to a decrease of 105,000, significantly lower than the initial estimate. The unemployment rate rose to 4.6% in November, higher than the expected 4.5%, reaching a new high since September 2021. Regarding retail sales, overall sales were flat month-over-month in October, lower than expected; however, retail sales in the "core control group," excluding automobiles, gasoline, building materials, and food services, saw a strong month-over-month increase of 0.8%, far exceeding the expected 0.4%, indicating that consumer spending in core areas remains resilient.
Prior to the report's release, the market was concerned about a rapidly cooling job market, potentially even leading to negative growth, which was a key factor in the Federal Reserve's decision to cut interest rates last week. The actual data presented a mixed picture: while job growth did not collapse, its momentum weakened significantly, and the rise in the unemployment rate was partly due to a rebound in the labor force participation rate; meanwhile, the strong performance of core retail sales temporarily alleviated excessive anxiety about a contraction in consumption.
Following the data release, financial markets reacted swiftly and divergently. Spot gold surged more than $10 from around $4,301/ounce before the data release, reaching a high of $4,312, before stabilizing around $4,308; the COMEX gold futures main contract also rose to around $4,339. The US dollar index accelerated its decline, falling from around 98.05 to below 97.90. US Treasury yields generally fell, with the 10-year yield dropping about 2.7 basis points to 4.157%. Interest rate futures markets indicated that traders' expectations for a Fed rate cut in January next year have increased slightly, but their overall expectation for rate cuts in 2026 remains around two cuts totaling about 58 basis points.
From a fundamental perspective, this data further confirms that the US labor market is experiencing a moderate slowdown. Analysts point out that although November's employment figures were better than expected, combined with the significant downward revision in October and the continuous downward trend in previous months, hiring momentum has weakened considerably. The unemployment rate rose to 4.6%, which, while partly influenced by statistical factors, still indicates increased pressure in the labor market. Of particular note is the slowdown in wage growth—average hourly earnings in November increased by only 0.1% month-on-month, lower than expected, and the year-on-year increase fell to 3.5%, which helps alleviate market concerns about persistent inflation in the service sector.
The divergence in retail data is equally evident: overall retail sales remained flat, reflecting a contraction in spending on discretionary consumer categories such as automobiles and clothing; however, core sub-categories saw significant growth, indicating that spending on necessities or services such as furniture and healthcare remained resilient. This divergence reflects the current cautious mindset within the business community: against the backdrop of external trade policy uncertainty, some companies tend to postpone expansion plans and instead focus on leveraging technologies such as artificial intelligence to improve efficiency, rather than engaging in large-scale hiring, thus achieving a balance of "low turnover and low hiring."
Market participants' immediate interpretations highlighted the complexity of sentiment. Institutions generally considered the report "mixed": the sharp negative figure for October's employment was unexpected, but the rebound in November and strong core retail sales eased the pressure of an immediate economic deterioration. Some institutions interpreted the rise in the unemployment rate as primarily due to increased labor force participation rather than a wave of layoffs, and combined with the consumption data, this was insufficient to force the Federal Reserve to take emergency action in January; the short-term policy path is likely to remain stable. Others cautioned that recent data has been quite noisy due to the government shutdown, and actual job growth may be weaker than official figures, increasing the difficulty of interpreting future data.
Retail traders reacted more directly. Many noted the weakening dollar and declining yields, believing this supported gold prices, making them more likely to rise than fall in the short term. Others pointed out that slowing wage growth and divergent retail data suggested insufficient endogenous consumer momentum, recommending close monitoring of subsequent inflation data to confirm the trend. Overall, market sentiment did not become extremely pessimistic. Most retail investors believed that "the labor market is cooling, but not out of control," contrasting with the "sharp negative growth" feared by some before the data release, and explaining why risk assets did not experience a panic sell-off.
In summary, gold is clearly supported in the short term by a moderate increase in expectations of interest rate cuts. Technically, the upside resistance for gold is in the $4350-$4360 area, while the first support level is around $4300-$4310. The US dollar index is currently trading within a wide range of 97.00-98.50, and its direction will directly influence the volatility of gold prices.
Looking ahead, the US economic outlook remains uncertain. A cooling trend in the labor market has emerged, but resilient consumption and slowing wage growth give the Federal Reserve more room to maneuver, and the threshold for another rate cut in the short term remains high. Institutions generally expect the Fed's easing measures in 2026 to remain moderate, unless future data shows a sustained rise in the unemployment rate or a significant contraction in consumption. Furthermore, uncertainties in external trade policies and the continued impact of technology on the employment structure may keep the labor market in its current sluggish state. For gold, the medium- to long-term trend remains supported by a shift in interest rate expectations towards easing and a potentially relatively weak dollar, but caution is advised regarding potential two-way volatility caused by subsequent data revisions and unforeseen geopolitical events.
Overall, this belated data release shifted the market's focus from pre-release anxiety to a more balanced assessment. Going forward, the focus will shift to further confirmation from monthly economic data and how the Federal Reserve balances its policy pace between cooling employment and resilient consumption.
A belated combination of data: a mix of cooling employment and resilient consumption.
Data shows that U.S. nonfarm payrolls increased by 64,000 in November, better than the market expectation of around 50,000; however, the October figure was significantly revised down to a decrease of 105,000, significantly lower than the initial estimate. The unemployment rate rose to 4.6% in November, higher than the expected 4.5%, reaching a new high since September 2021. Regarding retail sales, overall sales were flat month-over-month in October, lower than expected; however, retail sales in the "core control group," excluding automobiles, gasoline, building materials, and food services, saw a strong month-over-month increase of 0.8%, far exceeding the expected 0.4%, indicating that consumer spending in core areas remains resilient.
Prior to the report's release, the market was concerned about a rapidly cooling job market, potentially even leading to negative growth, which was a key factor in the Federal Reserve's decision to cut interest rates last week. The actual data presented a mixed picture: while job growth did not collapse, its momentum weakened significantly, and the rise in the unemployment rate was partly due to a rebound in the labor force participation rate; meanwhile, the strong performance of core retail sales temporarily alleviated excessive anxiety about a contraction in consumption.
Institutional Investors vs. Retail Investors: Two Sentiments Revealed in One Report
Following the data release, financial markets reacted swiftly and divergently. Spot gold surged more than $10 from around $4,301/ounce before the data release, reaching a high of $4,312, before stabilizing around $4,308; the COMEX gold futures main contract also rose to around $4,339. The US dollar index accelerated its decline, falling from around 98.05 to below 97.90. US Treasury yields generally fell, with the 10-year yield dropping about 2.7 basis points to 4.157%. Interest rate futures markets indicated that traders' expectations for a Fed rate cut in January next year have increased slightly, but their overall expectation for rate cuts in 2026 remains around two cuts totaling about 58 basis points.
From a fundamental perspective, this data further confirms that the US labor market is experiencing a moderate slowdown. Analysts point out that although November's employment figures were better than expected, combined with the significant downward revision in October and the continuous downward trend in previous months, hiring momentum has weakened considerably. The unemployment rate rose to 4.6%, which, while partly influenced by statistical factors, still indicates increased pressure in the labor market. Of particular note is the slowdown in wage growth—average hourly earnings in November increased by only 0.1% month-on-month, lower than expected, and the year-on-year increase fell to 3.5%, which helps alleviate market concerns about persistent inflation in the service sector.
The divergence in retail data is equally evident: overall retail sales remained flat, reflecting a contraction in spending on discretionary consumer categories such as automobiles and clothing; however, core sub-categories saw significant growth, indicating that spending on necessities or services such as furniture and healthcare remained resilient. This divergence reflects the current cautious mindset within the business community: against the backdrop of external trade policy uncertainty, some companies tend to postpone expansion plans and instead focus on leveraging technologies such as artificial intelligence to improve efficiency, rather than engaging in large-scale hiring, thus achieving a balance of "low turnover and low hiring."
Market participants' immediate interpretations highlighted the complexity of sentiment. Institutions generally considered the report "mixed": the sharp negative figure for October's employment was unexpected, but the rebound in November and strong core retail sales eased the pressure of an immediate economic deterioration. Some institutions interpreted the rise in the unemployment rate as primarily due to increased labor force participation rather than a wave of layoffs, and combined with the consumption data, this was insufficient to force the Federal Reserve to take emergency action in January; the short-term policy path is likely to remain stable. Others cautioned that recent data has been quite noisy due to the government shutdown, and actual job growth may be weaker than official figures, increasing the difficulty of interpreting future data.
Retail traders reacted more directly. Many noted the weakening dollar and declining yields, believing this supported gold prices, making them more likely to rise than fall in the short term. Others pointed out that slowing wage growth and divergent retail data suggested insufficient endogenous consumer momentum, recommending close monitoring of subsequent inflation data to confirm the trend. Overall, market sentiment did not become extremely pessimistic. Most retail investors believed that "the labor market is cooling, but not out of control," contrasting with the "sharp negative growth" feared by some before the data release, and explaining why risk assets did not experience a panic sell-off.
Technical Analysis: Key Support and Resistance Zones for Gold
In summary, gold is clearly supported in the short term by a moderate increase in expectations of interest rate cuts. Technically, the upside resistance for gold is in the $4350-$4360 area, while the first support level is around $4300-$4310. The US dollar index is currently trading within a wide range of 97.00-98.50, and its direction will directly influence the volatility of gold prices.
Outlook: The Fed's Slow and Stewed Growth and the Future of Gold
Looking ahead, the US economic outlook remains uncertain. A cooling trend in the labor market has emerged, but resilient consumption and slowing wage growth give the Federal Reserve more room to maneuver, and the threshold for another rate cut in the short term remains high. Institutions generally expect the Fed's easing measures in 2026 to remain moderate, unless future data shows a sustained rise in the unemployment rate or a significant contraction in consumption. Furthermore, uncertainties in external trade policies and the continued impact of technology on the employment structure may keep the labor market in its current sluggish state. For gold, the medium- to long-term trend remains supported by a shift in interest rate expectations towards easing and a potentially relatively weak dollar, but caution is advised regarding potential two-way volatility caused by subsequent data revisions and unforeseen geopolitical events.
Overall, this belated data release shifted the market's focus from pre-release anxiety to a more balanced assessment. Going forward, the focus will shift to further confirmation from monthly economic data and how the Federal Reserve balances its policy pace between cooling employment and resilient consumption.
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