The Job Openings and Labor Turnover Survey (JOLTS) is a program by the U.S. Bureau of Labor Statistics that produces job data on openings, separations, hires, and notices. Each month, JOLT releases a job openings report to represent conditions in the U.S. labor market. Investors and analysts use this information to better understand job turnover rates and labor demand in response to other economic conditions.
January’s labor report from JOLTS showed 10.82 million job openings, on par with the average monthly figures since 2021. In general, reports from the last few years have remained above the 10 million level.
On April 4, however, JOLTS released the February figure showing a significant drop in job openings to 9.93 million, despite predictions showing 10.4 million. To add insult to injury, the number dropped again in March down to 9.6 million.
The market consensus expected to see 9.8 million job openings from the JOLTS report for March’s figures, though the numbers keep dropping at a faster rate than predicted.
While this announcement may be bad news for most market sectors, it did give rise to one asset class: gold. Gold performs best when the economy suffers. People turn to gold and other precious metals as a safe-haven investment strategy to protect their finances as the economy crumbles and the U.S. dollar loses its value.
Announcements of fewer job openings give rise to gold, allowing it to perform at peak levels. While more aspects of the economy fail, gold prices only continue soaring as we progress through each month of 2023.
Job openings were not the only figure included in the JOLTS report. The comprehensive announcement included numerous key insights that only further depicted the state of the economy.
To start, layoff rates have increased by 1.2%, rising to a whopping 1.8 million. The primary layoff industries include construction, food services, health care, and accommodation. Factory Orders also dropped by 0.7% month-over-month, despite the estimated 0.5% consensus.
Quitting rates dropped slightly by 2.5%, totaling 3.9 million. This reduction makes sense, given the drop in job openings. People tend to stay put when fewer options become available.
The ratio between job openings and unemployed people decreased to 1.6 in the month of March, showing the lowest figure since October 2021. The Federal Reserve typically considers this figure when contemplating rate hikes as a strategy to combat inflation. Speaking of inflation, the Federal Reserve also just announced another rate hike only days ago, giving gold a momentary boost up to $2,066 per ounce—the highest price point of the year so far.
The gold market truly began rallying after the release of the JOLTS job openings decline. The U.S. Dollar Index dropped to the 101.70 level, with treasury yields plummeting as well, both giving further rise to gold.
JOLTS released March’s figures on May 2, when gold rang in at $2,023 per ounce. By May 3, when the Federal Reserve announced its 25 basis point rate hike, the precious metal increased to $2,037 per ounce. The same day, gold hit a momentary high of $2,066 per ounce, its highest price point of the year.
Between the declining job openings report and the additional rate hikes, the state of the U.S. economy is clear.
The worse things get, the more people stockpile gold. Gold demand continues to soar across sectors and nations. U.S. investors aren’t the only group raising prices. Central banks across the globe have been buying more gold than ever to combat inflation.
The first two months of 2023 showed the most central bank gold purchases than any year on record since net purchases began in 2010. In 2022, central banks bought more gold than they had since 1967. If nations continue buying at this rate, 2023 will be a record year for gold performance.
“Looking ahead, we see little reason to doubt that central banks will remain positive towards gold and continue to be net purchasers in 2023,” the World Gold Council explains.
The only question will be how much. “We prefer gold as a buy in a portfolio context and forecast prices to touch USD 2,100/oz by end-December and USD 2,200/oz by end-March 2024,” UBS, a multinational investment bank and financial services company, explains.
While economic turmoil may not be positive, it does offer good news for gold investors. Typically, gold performs best when held long-term, though recent price spikes display the potential for short-term earnings as well. As always, investors should consult their financial advisors before making any portfolio decisions.