US Jobs Report Ignites Gold Refusal to Fall, Dollar Fails to Rally

The US jobs report for August showed a strong gain of 162,000 positions, far exceeding expectations. This was accompanied by revisions adding another 55,000 jobs to prior months' data, solidifying the economy's momentum.

Gold and the US dollar have been behaving strangely in response to this positive news. Despite the strong economic indicators, gold has refused to fall, a trend it has followed twice before - once when real yields climbed in July and again with the latest jobs report.

The US dollar also failed to rally as expected, with markets seemingly unconcerned by inflation risk despite rising oil prices. Instead, breakeven inflation rates have remained pinned at year lows, only recently stirring back to life.

The 30-year Treasury bond has been another key indicator, stubbornly resisting price increases and remaining stuck at a critical floor established in late July. This level was defended by the US government, with Treasury Secretary Scott Bessent doubling down on bond buyback operations from $2 to $4 billion after markets probed it again last week.

Markets are now pricing in longer-run inflation consequences of holding down long-term yields, rather than focusing solely on short-term rate hikes. This is reflected in the yield curve, which has flattened at the long end but steepened at the front end.