Gold plunged by more than $30 in one go, with spot prices falling to $4,042 an ounce. The reason: U.S. October nonfarm payroll data came in much stronger than expected. 📉
First, the data:
• The unemployment rate in October was 4.1%, versus market expectations of 4.2%; the previous reading was also 4.2%
• August’s nonfarm payrolls were revised up from 133,000 to 186,000, an increase of 53,000
• September’s figure was revised up from 29,000 to 60,000, an increase of 31,000
• Together, the two months saw 84,000 more jobs added than previously reported
The report didn’t just look strong for the month in question; the figures for the previous two months were also revised upward. The labor market is more resilient than people had thought, and that’s more noteworthy than any single month’s figure.
The market reaction was immediate. U.S. short-term interest rate futures fell, and traders increased their bets on another Fed rate hike in December. Remember, the Fed just raised rates on September 16 for the first time since 2023, and the current chair is Kevin Warsh. If employment remains this strong, more people will believe that another rate hike in December is on the table. A stronger dollar and higher interest rates are usually bad for gold, and this drop in gold prices is a case in point.
Meanwhile, Canada’s unemployment rate edged up in October to a nearly six-month high, a clear divergence from the U.S. trend.
For risk assets like $BTC , rising rate hike expectations generally reduce liquidity, which could weigh on short-term sentiment. But what I’m more interested in is the inflation data due before December—it will determine whether a rate hike actually happens.
Do you think rates will be raised again in December?
#NFP #Fed #Gold
First, the data:
• The unemployment rate in October was 4.1%, versus market expectations of 4.2%; the previous reading was also 4.2%
• August’s nonfarm payrolls were revised up from 133,000 to 186,000, an increase of 53,000
• September’s figure was revised up from 29,000 to 60,000, an increase of 31,000
• Together, the two months saw 84,000 more jobs added than previously reported
The report didn’t just look strong for the month in question; the figures for the previous two months were also revised upward. The labor market is more resilient than people had thought, and that’s more noteworthy than any single month’s figure.
The market reaction was immediate. U.S. short-term interest rate futures fell, and traders increased their bets on another Fed rate hike in December. Remember, the Fed just raised rates on September 16 for the first time since 2023, and the current chair is Kevin Warsh. If employment remains this strong, more people will believe that another rate hike in December is on the table. A stronger dollar and higher interest rates are usually bad for gold, and this drop in gold prices is a case in point.
Meanwhile, Canada’s unemployment rate edged up in October to a nearly six-month high, a clear divergence from the U.S. trend.
For risk assets like $BTC , rising rate hike expectations generally reduce liquidity, which could weigh on short-term sentiment. But what I’m more interested in is the inflation data due before December—it will determine whether a rate hike actually happens.
Do you think rates will be raised again in December?
#NFP #Fed #Gold
