Robust US jobs fuel Fed rate hike bets as gold slides
Spot gold dropped as much as 3.6% on June 5 after the US economy added 172,000 jobs in May, about double the ~85,000 forecast. April’s payrolls were revised up to 179,000, while the unemployment rate held at 4.3%.
CME FedWatch moved quickly: the probability of a Fed rate hike by December 2026 jumped to roughly 68%–72% from around 50% before the jobs report. These Fed rate hike bets also pressured silver, which fell up to 7.8% in the same session.
The article frames a macro “double headwind” for gold. First, higher Treasury yields raise the opportunity cost of holding a non-yielding asset. Second, the US dollar strengthened after the data, making dollar-priced gold more expensive for overseas buyers. It also notes that gold has already given back more than 16% since late February, when Middle East geopolitical tensions increased and helped keep inflation risks elevated.
Crypto spillover: Bitcoin and other risk assets also fell following the jobs data. Traders should watch how elevated Fed rate hike bets translate into tighter financial conditions (higher real yields, stronger USD) versus any later risk-on rebound if rate expectations cool.
Bearish
The jobs report surprised to the upside (172k vs ~85k) and April was revised higher, keeping the unemployment rate steady. That combination drove higher Treasury yields and strengthened the USD, which typically hurts gold (a non-yielding asset) and also pressures risk assets like Bitcoin. This aligns with past episodes where “higher-for-longer” rate repricing tightened financial conditions: equities and crypto often weaken first, then stabilize only if the market subsequently prices fewer hikes or yields retrace.
In the short term, the elevated Fed rate hike bets (68%–72%) increase discount-rate pressure and can sustain volatility and sell-offs in BTC. In the long term, the direction depends on whether inflation/geopolitics force sustained hawkishness or whether economic growth cools and rate expectations roll over. If Fed rate hike bets later unwind, BTC could benefit from improving liquidity and falling real yields.