Key takeaways
Gold and Bitcoin fell as US payrolls beat forecasts by about 100,000.
The dollar index jumped to 102.22 before settling near 102.14.
Traders priced a 77% chance of a December Fed hike after the data.
Gold and Bitcoin (BTC) fell and the dollar jumped after the US jobs report showed 165,000 new jobs in October, nearly three times forecasts. The data landed five weeks before a Federal Reserve meeting where traders already priced a likely rate hike.
The moves were small, but they all pointed the same way. Strong hiring gives the Fed room to raise rates, which tends to lift the dollar and weigh on assets that pay no interest, such as gold and Bitcoin.
How Gold, Bitcoin, and the Dollar Reacted to the Jobs Report?
Gold took the sharpest hit. It dropped to about $4,032 an ounce within minutes of the 8:30 a.m. ET release, down from roughly $4,062 just before. It later recovered to about $4,050.
The drop extends a long slide. BeInCrypto has tracked a 31% gold price crash from the metal’s peak.
BTC whipsawed. It briefly climbed above $76,100, then fell to about $75,600 before trading near $75,780 on Binance, roughly 0.2% below its pre-release level.
Meanwhile, the US Dollar Index (DXY), which tracks the dollar against six major currencies, spiked to about 102.22. It then settled near 102.14, up from 102.07 before the data.
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Gold, Bitcoin, DXY, and S&P 500 reaction to the US jobs report, Source: TradingView
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old, Bitcoin, DXY, and S&P 500 reaction to the US jobs report, Source: TradingView
US stocks open at 9:30 a.m. ET with little room for another shock. The Nasdaq Composite fell 5.52% on Thursday, sliding into Nasdaq correction territory, while the S&P 500 closed at 7,353.73.
Why Strong Hiring Knock Gold and Bitcoin Lower
The beat was broad. Economists expected 59,000 to 65,000 jobs, and the Bureau of Labor Statistics (BLS) reported 165,000. Unemployment fell to 4.1%, below the 4.2% forecast.
Earlier months were stronger too. August and September were revised up by a combined 84,000 jobs, lifting the three-month hiring average to about 137,000.
Pay also ran hot. Average hourly earnings rose 0.4% in October and 3.1% from a year earlier, against forecasts of 0.3% and 2.9%.
Before the data, Barclays said a 4.1% jobless rate with only modest job gains would keep a December hike in play. October delivered the 4.1% rate and far more than modest hiring.
Is a December Fed Rate Hike Now Locked in?
Not by the data alone. Traders priced a 67% chance of a quarter-point hike at the December 8 and 9 meeting before the report, according to CME FedWatch figures. The odds surged to 76.8% as of this writing.
The Fed raised rates in September for the first time in three years, then held its range at 3.75% to 4.00% on October 28.
Jobs data has not been the only driver. After September’s weak 29,000 print, December hike odds still rose to 73% from 42% within a month, Kiplinger reported.
Some analysts set a higher bar. MUFG said a sustained bond selloff would likely need gains of about 200,000 and a falling jobless rate. October’s 165,000 fell short of that mark.
What Gold and Bitcoin Holders Face Before December 9
BeInCrypto flagged the jobs report earlier this week as one of three big Bitcoin tests, alongside the midterm elections and central bank rate decisions. CNBC’s Jim Cramer also warned it could test the midterm rally.
The Fed’s December meeting will include fresh rate projections. Those will show whether officials see one more hike or a longer tightening cycle, a path that sets borrowing costs for US households and the dollar that gold and Bitcoin trade against.
