Gold and Bitcoin Slide as Blowout Jobs Report Revives Fed Rate-Hike Fears
Gold and Bitcoin took a steep dive on Friday after a surprisingly strong U.S. jobs report revived expectations that the Federal Reserve could raise interest rates this month. The reaction spread across precious-metal miners and crypto-linked stocks as Treasury yields climbed and the dollar strengthened.
The U.S. added 162,000 jobs in August, far above forecasts of roughly 55,000 to 65,000. The unemployment rate held at 4.1%, convincing traders that the economy may be strong enough to withstand additional monetary tightening.
Gold Retreats as Yields Climb
Gold dropped more than 2% following the report, with spot prices falling toward $4,375 per ounce after trading above $4,500 earlier in the week. Gold futures also declined more than 2%. The move was a sharp reversal from Thursday, when falling Treasury yields and more dovish comments from Fed Governor Christopher Waller helped bullion rebound.
Stronger employment data quickly changed that setup by increasing the appeal of yield-bearing assets relative to gold. Gold miners followed bullion lower, with Newmont, Barrick Mining, Agnico Eagle, Kinross Gold and other major producers coming under pressure.
Bitcoin Falls Back Below $80,000
Bitcoin experienced a similar reversal. The cryptocurrency had climbed above $81,000 earlier Friday as traders reduced expectations for a September rate hike, but the jobs report erased much of that optimism. Bitcoin subsequently fell more than 2% to around $79,500 as investors moved away from risk-sensitive assets.
The decline came despite improving institutional demand, with U.S. spot Bitcoin ETFs recording roughly $277 million in provisional inflows Thursday. Crypto-linked stocks were hit alongside Bitcoin. Strategy, Coinbase, Galaxy Digital and Robinhood moved lower, while Bitcoin miners including MARA, Riot Platforms, CleanSpark, Hut 8 and IREN also faced selling pressure.
Fed Expectations Flip Again
The rapid moves in gold and Bitcoin show just how dependent both markets have become on expectations for monetary policy. After Waller suggested Thursday that rates could remain unchanged if inflation continues to cool, traders had pushed the probability of a September hike closer to a coin flip. Friday’s jobs report sent those odds back toward 60%-65%.
Higher interest rates tend to create a particularly difficult backdrop for gold because the metal generates no yield. Bitcoin is different, but tighter financial conditions and a stronger dollar can still reduce investor appetite for speculative and alternative assets.
Inflation Is Now the Deciding Factor
Despite Friday’s reaction, the Fed decision is far from settled. Wage growth slowed to 3.1% annually, its weakest pace in years, providing some evidence that labor-related inflation pressures are cooling even as hiring accelerates. That puts even greater importance on next week’s inflation data. A hot CPI report combined with strong employment growth could give the Fed a much clearer case for another hike, while softer inflation could once again push those expectations lower.
Looking Ahead
Gold and Bitcoin are entering another pivotal week with both increasingly tied to the same macro forces: Treasury yields, the dollar and Fed policy. Friday’s jobs surprise showed how quickly sentiment can reverse when expectations for interest rates change. For now, stronger employment has handed the advantage back to the hawkish side of the Fed debate. But with inflation data still ahead, the next major move in both gold and Bitcoin may depend less on Friday’s jobs strength than on whether price pressures finally show convincing signs of cooling.
