Friday was not a good day for gold bugs or crypto enthusiasts. A hotter-than-expected jobs report has the market bracing for a Federal Reserve rate hike this month, and the selling was concentrated in exactly the corners of the market you'd expect.
The U.S. economy added 162,000 jobs in August, blowing past the consensus estimate of 56,000. To make things even more interesting, July's previously reported loss of 23,000 jobs was revised into a gain of 21,000. So the labor market is not just holding up; it's actually looking stronger than we thought.
That shifts the spotlight squarely onto inflation. With price pressures still running above the Fed's 2% target, the stronger jobs data has investors convinced the central bank will act. According to CME FedWatch, the probability of a hike to 3.75%-4% at the Sept. 16 FOMC meeting now stands at 60.2%, up from 49.4% just a day earlier. The odds of a hold have dropped to 39.8%.
"The August jobs report was much better than expected, focusing the Fed squarely on controlling inflation when they meet next in September," said Bill Adams, chief economist at Fifth Third Commercial Bank.
Gold Miners Take the Brunt
The VanEck Gold Miners ETF (GDX) fell 1.90% shortly after the open, making it the weakest performer among equity industries. Spot gold prices dropped 1.4% to $4,400 per ounce.
Why? It's all about interest rates. Higher rates tend to weigh on non-yielding assets like gold and Bitcoin, and they also put pressure on companies whose valuations are sensitive to borrowing costs. The 2-year Treasury yield spiked to 4.425% within minutes of the jobs release, while the 30-year yield sat at 5.236%.
Bitcoin (BTC) fell 2.10% to about $79,461, slipping below $80,000 after briefly trading above $81,200 before the data came out.
The biggest decliners among stocks with more than $10 billion in market capitalization were concentrated in two groups: gold miners and crypto-linked companies. Here's a snapshot of the damage:
| Company | Price | Change |
|---|
| Circle Internet Group, Inc. (CRCL) | $97.50 | -3.78% |
| BitMine Immersion Technologies, Inc. (BMNR) | $25.19 | -3.71% |
| Franco-Nevada Corporation (FNV) | $263.50 | -3.64% |
| Gold Fields Limited (GFI) | $47.55 | -3.59% |
| Equinox Gold Corp. (EQX) | $12.66 | -3.51% |
| IAMGOLD Corporation (IAG) | $20.11 | -3.46% |
| AngloGold Ashanti plc (AU) | $108.31 | -3.30% |
| Agnico Eagle Mines Limited (AEM) | $201.26 | -3.05% |
| Strategy Inc. (MSTR) | $137.78 | -2.98% |
What's Next?
The market's next big test is inflation. On Thursday, Fed Governor Christopher Waller said he could support holding rates if inflation continues to improve, but he also said he would consider a hike if August inflation comes in hot.
That makes the August Consumer Price Index, due Sept. 11 at 8:30 a.m. ET, particularly important. It will be the last major inflation reading before the FOMC meets on Sept. 16.
A strong jobs report has already increased the odds of a hike. Now even an in-line CPI reading could turn those expectations into a much firmer conviction.
Still, some experts argue that higher interest rates might not be enough to derail the broader market rally. "We will be watching to see if the stock market shakes this off and rallies into the close before the long weekend, because that will indicate the optimism around the AI build-out — and extremely strong corporate earnings — are the most important factors, and Fed rate changes are less important for investor psychology," said Chris Zaccarelli, chief investment officer for Northlight Asset Management.
So, buckle up. The next few weeks could be bumpy, especially for gold miners and crypto stocks, as the market digests the prospect of higher rates for longer.
