Stronger-than-expected August jobs data significantly increased the probability of a September Federal Reserve rate hike, leading to a sharp sell-off in non-yielding assets like gold and Bitcoin, and consequently, gold mining and crypto-linked stocks. The market is now heavily focused on the upcoming August CPI report as the final determinant for the Fed's next move.
The August jobs report, showing 162,000 new jobs against an estimated 56,000, and a significant upward revision of July's figures, has dramatically increased the likelihood of a Federal Reserve rate hike in September. This 'hot' jobs data strengthens the Fed's resolve to combat inflation, which remains above its 2% target. Consequently, assets that do not yield interest, such as gold and Bitcoin, become less attractive compared to interest-bearing alternatives, leading to a sell-off. Gold miners and crypto-linked companies are directly affected as their underlying assets decline in value and their valuations are sensitive to higher borrowing costs. The short-term implication is continued volatility for these sectors, with the August CPI report on Sept. 11 being the next critical data point. Traders should watch for further confirmation of inflation trends, as an in-line or hot CPI reading could solidify the Fed's hawkish stance, posing a significant risk to non-yielding assets and related equities.