Signs of weakening of the US economy are gradually becoming clear. The preliminary benchmark for non-farm employment in the United States in 2025 was significantly lowered by 911,000 people, significantly lower than expected by 700,000 people, and the previous value was 598,000 people. In addition, although the official unemployment rate is only 4.3%, if we count the number of people currently engaged in part-time but prefer full-time jobs, this number reached 8.1% in August, the highest in four years. In July this year, the number of new jobs in the United States was lower than the number of unemployed people, the first time in four years.
According to Ernst & Young’s survey, 25% of job seekers in the United States are currently unemployed for more than 6 months, which was 20% last year. According to the New York Fed, Americans’ confidence in finding a job after unemployment has dropped to their lowest level since 2013.
A weakening of the U.S. economy may support the Fed to cut interest rates on a larger scale, thereby reducing the opportunity cost of holding gold. So the key question is how the path to rate cuts will evolve after this month. Currently, according to federal funds rate futures, the probability of interest rate cuts rose to 93% by the end of 25, and the rate cut rose to 70bps.
A cycle that is longer than the interest rate cut cycle is global “de-dollarization”. Central Bank Governor Pan Gongsheng published an article in “Qiushi” today, reviewing the historical evolution of the international monetary system and pointing out that there are inherent instability problems with a country (US) sovereign currency to assume the function of international dominant currency. He also pointed out that the current discussion on the international monetary system focuses on how to weaken the excessive dependence and negative impact on a single sovereign currency and form a benign competition and incentive and constraint mechanism for a few strong sovereign currencies.
Judging from the data, the US dollar’s share of global foreign exchange reserves has fallen from 73% in 2001 to 58% at present, while the proportion of gold reserves has increased. In the foreseeable future, the US dollar will still dominate foreign exchange reserves, payment settlements, and investment and financing, but the marginal weakening of its position will systematically increase the allocation demand for gold. And gold, unlike other sovereign currencies that may replace the US dollar, naturally have the scarcity of supply and the geopolitical risk premium. Therefore, the global central bank’s gold purchase trend is still continuing. The People’s Bank of China released the latest gold reserve data, showing that gold reserves at the end of August were 74.02 million ounces, a month-on-month increase of 60,000 ounces, which is the tenth consecutive month of increase in gold.
Investors can lay out related opportunities through the Gold Fund ETF (518800) and Gold Stock ETF (517400). If gold prices adjust in the short term, you can consider setting up on dips.
