Strong US Payrolls Report Hits Gold and Bitcoin with Higher Rate Hopes

The August US payrolls report was stronger than expected, adding 162,000 jobs and revising June and July figures higher by 55,000. This data surprised investors who had been scaling back expectations for a September rate increase after Fed Governor Christopher Waller indicated he could support keeping rates unchanged if inflation continued to improve.

The payroll report changed the market's setup almost immediately, with Treasury yields moving higher, the dollar strengthening and the probability of a September Fed rate hike climbing to roughly 65% from around 55%. This shift put pressure on both gold and Bitcoin, which were initially trading favorably due to a softer economic outlook.

Gold dropped more than 2% at first, falling from $4,469 an ounce to $4,376. However, it later recovered toward $4,419, down around 1.2%. Bitcoin retreated from its early-Friday high above $82,000 to below $80,000 and traded near $79,600.

The reaction highlights the difference in how gold and Bitcoin are trading this year. Gold is being pulled in two directions: higher rates and a stronger dollar create pressure, but geopolitical uncertainty provides another source of demand that can limit the downside. Bitcoin does not appear to have the same support and remains more sensitive to changes in liquidity and risk appetite.