The better-than-expected US jobs report bolstered expectations for steep rate hikes by the Federal Reserve. After this data, gold and Bitcoin (BTC) turned south. Gold fell below $1,700, while Bitcoin dropped below $20,000. Now all eyes are 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 psychological 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. Meanwhile, the crypto market turned south as it became clear that the Fed would not compromise its hawkishness. The leading crypto Bitcoin has slipped below $ 20 thousand 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 support at $1,690, a retest of the $1,660 level is possible. The market will now focus on key inflation data and Fed minutes for the next week.
Gold and Bitcoin lost altitude after US NFP
Krypokoin.comAs 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. Because 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.
The dollar gained strength against its rivals after the data. This made gold more expensive for other coin 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 some safe-haven 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 estimates are anywhere between 248,000 and 275,000. Because he records that some see the data better than expected.
Jeff Wright also notes another data point in the report. He notes an average increase of 5% over the annual comparison. That’s why he says “with respect to gold, the data is inflationary.” Based on this, he makes the following statement:
Gold futures ended the week still higher with some safe-haven purchases. However, I do not 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 plenty of room”
Jim Wyckoff states that the details in the report show that the labor market is in better shape than the headline figure. It also says it gives the Fed plenty of room to continue 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 statements:
The report cited good domestics that did not strongly suggest that the US economy is headed for recession.
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