The better-than-expected US jobs report reinforced expectations for steep rate hikes by the Federal Reserve. After this data, gold and Bitcoin (BTC) turned their direction to the south. Gold fell below $1,700, while Bitcoin dropped below $20,000. All eyes are now on the US CPI and FOMC minutes to be released next week.
Markets will now focus on US CPI and FOMC minutes
Spot gold closed Friday and week below the spiritual level of $1,700. The yellow metal was down 1.05% to $1,694.6. However, the precious metal is up about 2.4% so far this week. In the midst of this, the crypto market also turned south when it became clear that the Fed would not compromise on its hawkishness. President crypto Bitcoin has slipped below $20,000 again.
Gold and Bitcoin investors are now focused on next week’s US CPI data and FOMC minutes. These data will provide more clues as to the Fed’s stance. Tai Wong, senior trader of Heraeus Precious Metals in New York, comments:
The market is looking to the stronger-than-expected payroll report as further impetus for the Fed’s early November meeting to raise another 75 bps. If bullion fails to hold a foothold at $1,690, it is likely to test the $1,660 level again. The market will now focus on key inflation information and Fed minutes next week.
Gold and Bitcoin lost altitude after US NFP
Krypokoin.com As you follow, US NFP data pointed to more jobs than expected in September. It also showed that the unemployment rate fell to 3.5%. Gold and Bitcoin are highly sensitive to rising US interest rates. They increase the opportunity cost of holding non-returning bullion. It also reduces the appetite for risk assets. Therefore, it negatively affects Bitcoin and the crypto market.
After the data, the dollar gained strength against its rivals. This made gold more valuable to other money holders. Jim Wyckoff, senior analyst at Kitco Metals, comments:
Gold traders will once again focus more on Fed policy. It will also closely monitor geopolitics, which is likely to lead to a measure of safe harbor demand.
“My bias on gold is negative”
The US saw a historically strong 263,000 new job gains in September. But it’s the smallest increase in hiring since April 2021. Economists surveyed by The Wall Street Journal predicted 275,000 new jobs. Jeff Wright, chief investment officer at Wolfpack Capital, says gold is under pressure as market claims are anywhere between 248,000 and 275,000. Because he records that some people see the information better than expected.
Jeff Wright also notes another point of information in the report. He notes an average increase of 5% compared to the annual comparison. That’s why he says that “in relation to gold, the data is inflationary.” Based on this, he makes the following statement:
Gold futures ended the week still on the rise, with some measure of confident port purchases. But I don’t think this trend will continue. Right now my bias on gold is negative. Also, I don’t see any fundamental rationale to buy at rising interest rates.
“The report gave the Fed a lot of room”
Jim Wyckoff states that the details in the report show that the labor market is in better shape than the headline number. He also says it gives the Fed plenty of room to keep raising rates without fear of damaging the economy. Wyckoff points to a lower unemployment rate of 3.5% as an example. In this context, he records the following words:
The report showed smooth interior sections that do not strongly suggest that the US economy is headed for recession.