A growing concern over the approval of the “big beautiful bill” and mega spending has forced gold to rebound after the US employment report was released last night.
The US Employment Report
The US employment report, including the nonfarm payroll and unemployment rate, is showing positive signs for the labor market conditions, and yet, this could possibly be impacted by a high rise in the government sectors if we take a closer look at the private nonfarm payroll data and compare it with the ADP employment rate on Wednesday.
The Big Beautiful Bill
Another step closer to achieving the “big beautiful bill” and mega spending approval, and yet, this will raise the debt deficit with roughly 6% of the GDP in the next few years, as per Capital Economics’ Paul Ashworth. And even the US Treasury Secretary Bessent also cited that the debt-to-GDP ratio will be well into the 90% range by the end of Trump’s term. All of these signal a rising debt problem and a continuous inflation problem.
***The bill is expected to be signed on Friday at 5 pm ET (around 5 AM GMT+8)
These two factors really give a mixed signal in the market and the Federal Reserve, as they need to weigh between holding and cutting the rate. One is strong labor market conditions and high inflation that restrain from cutting, and another is the debt problem, which may require cuts to revive the economy from falling into deeper debt piling.
All in all, what we can really say is that now the markets are leaning toward holding the rate in the next meeting, which is set on 31 July. But the problem starts in September, which remains uncertain.
Other information:
Trump voiced his frustration with this progress and is also expected to call Ukraine on Friday and Iran within the next week.
Although Trump did not disclose any detailed information about Putin’s call last night, what we do know is that they both discussed Iran and the Middle East situation. A few hours later, Russia launched another missile at Ukraine, causing casualties and slightly pushing up the gold prices.
