Eva Chen

The U.S. Department of Labor reported Friday that the labor market recovery continued in March. Overall employment increased by 431,000 in March. The unemployment rate declined by 0.2 percentage points to 3.6%, still 0.1 percentage points higher than the pre-pandemic level. Although the increase in employment was slightly below market expectations, employment valuations for both January and February were corrected upward. The U.S. monthly average growth for Q1 2022 was 562,000 jobs, with a limited overall impact on gold prices.

The current inflation in the US is very high. According to the latest data released by the US Department of Labor, the US CPI consumer price index in February was 7.9%, a new high since 1982. Against this backdrop, many are starting to predict whether the Fed will raise rates more aggressively than expected. At the same time, there are also concerns that the Fed's rate hike may cause the stock market to crash. The internal logic of the Fed raising interest rates is not so simple. The Fed raising interest rates will not definetely cause the stock market to crash.

Gold experienced an explosive spike and a surprisingly sharp pullback this past week; the factors that drove the price spike are apparent, yet there was clearly a significant risk premium for a sharp pullback, prompting institutional profit-taking. This week, when the market's attention will turn to Fed Chairman Powell's testimony and Friday's non-farm payrolls data, gold should return to its proper "financial" properties.

In the coming week, markets may experience more significant disruptions as the Russia-Ukraine conflict goes into full swing, including the latest US jobs report, Eurozone inflation data, and policy meeting of the Canadian central bank. Meanwhile, the scheduled monthly meetings of OPEC and non-OPEC countries may set the markets rippling again.

The Minutes of the Fed's January meeting suggested that if economic developments were generally consistent with the committee's expectations, the federal funds rate's target range could rise faster than it had in 2015. According to the CME Fed Watch tool, it means the market sees the Fed raising rates four to five times in 2022; So will the Fed's rate hike lead to a crash?

U.S. nonfarm payrolls increased by 467,000 in January, well above market expectations of 150,000. Last month's figure was also revised up sharply to 510,000 from 199,000. Employment remains 2.9 million below pre-pandemic levels. The unemployment rate rose to 4.0% from 3.9%, above expectations of 3.9%. The labor force participation rate rose from 61.9 percent to 62.2 percent. Average hourly earnings rose 0.7% sequentially, beating market expectations of 0.5%.

The Bank of Canada left its main interest rate unchanged at 0.25% on Wednesday, but said it would raise rates to combat high inflation. According to the statement, it would remove special forward guidance - a special commitment to keep the policy rate at an effective floor.

The U.S. Bureau of Labor Statistics released a report today showing that total non-farm payroll employment increased by 199,000 in December, with the unemployment rate registering 3.9%. Employment in the leisure and hospitality, professional and business services, manufacturing, construction, and transportation and warehousing sectors continued to trend upward.

With the US non-farm payrolls data due out soon, how is Wall Street viewing the data? What will be the future of the Fed's policy?