US economic data stirs the market: gold, US stocks and Bitcoin triple shock

On Thursday (October 31), spot gold plummeted by $43.50, or 1.56%, after hitting a record high. This plunge revealed the volatility of investors' risk aversion. As gold fell back, the crypto market and U.S. stocks also experienced varying degrees of volatility, reflecting investors' uncertainty about the future economic direction.

Gold: Pulling back from new highs

On that day, the price of gold once hit $2,790.11 per ounce, setting a record high. However, due to the release of strong US economic data, investors chose to take profits at high levels, causing the price of gold to fall rapidly. According to Bloomberg analysis, gold recorded its largest single-day drop since July, reflecting the pressure on the market from strong employment data and the core personal consumption expenditure (PCE) index. Data showed that the US core PCE price index rose 2.7% year-on-year in September, the same as the previous value and exceeding the expected 2.6%. This level of inflation has exacerbated expectations that the Federal Reserve will suspend interest rate cuts.

Peter Cardillo, chief market economist at Spartan Capital Securities, said Thursday's economic data further solidified market expectations of rising inflation in the future, which caused a brief decline in demand for gold as a safe-haven asset. However, Rhona O'Connell, an analyst at StoneX, pointed out that geopolitical tensions and the upcoming US election are still important factors supporting gold, and the market's willingness to buy gold on dips remains strong.

US stocks fluctuate: technology stocks suffer setbacks

U.S. stocks also fell sharply that day, especially technology stocks, which were under significant selling pressure. The Nasdaq index fell nearly 3%, and Microsoft and Meta suffered heavy losses due to concerns about artificial intelligence spending, falling 6% and 4% respectively. Although Microsoft and Meta's financial reports were better than market expectations, future capital expenditures increased investors' concerns about AI costs. The S&P 500 fell 1.86%, and the Dow Jones fell 0.9% due to the influence of technology stocks.

At the same time, the U.S. Department of Labor reported that initial jobless claims fell to 216,000, the lowest level since May. This strong labor market performance reduced market expectations for future loose monetary policy. Market sentiment has gradually turned conservative as the U.S. unemployment rate has remained low, and investors are worried that high interest rates will further erode corporate profits.

Crypto Markets: Bitcoin’s ‘Greed’ Sentiment

With the sharp fluctuations in gold and US stocks, the crypto market has also seen a significant correction in the past 24 hours. The price of Bitcoin hit a low of $68,830, and the entire network was liquidated with nearly $250 million. Some analysts believe that Bitcoin-led market sentiment has turned to "greed." Among the major cryptocurrencies, Ethereum performed relatively weakly, with a price drop of 3.16%, showing a trend of investors focusing more on Bitcoin. The overall market value of the cryptocurrency market fell slightly by 1.90%, which means that the market has entered a consolidation phase after the previous rise.

Market sentiment was further boosted by Microstrategy's announcement that it would raise $42 billion to buy more Bitcoin, while Coinbase's CEO said the next Congress would be the "most pro-cryptocurrency" Congress ever, reflecting the trend of the crypto market gradually receiving broader policy support.

US election and non-farm payrolls: Markets await direction

Behind the resonance of gold, cryptocurrency and the US stock market, the US election and the upcoming non-farm payrolls data are undoubtedly the dominant factors. Analyst Valencia pointed out that investors' risk appetite has decreased before the US election on November 5. In particular, the market is betting that the election showdown between former Republican President Trump and Democratic Vice President Harris will affect the trend of financial markets. With the intensification of geopolitical tensions and the uncertainty of the election results, the safe-haven demand for gold remains strong, and many investors still regard it as an ideal asset to hedge against future uncertainties.

In addition, the upcoming release of the non-farm payrolls report (20:30 on November 1, Beijing time) is also the focus of market attention. It is expected that the number of non-farm payrolls in October will drop significantly due to the impact of hurricanes and strikes. If the report meets expectations, it may weaken the market's confidence in the Fed's continued interest rate cuts. Investors generally expect that the Fed will suspend interest rate cuts at its meeting in early November.

summary

Changes in the global economic and political situation have made the linkage effect between gold, cryptocurrencies and US stocks more obvious. With uncertainty about inflation and the Federal Reserve's interest rate policy, and the US election and geopolitical tensions still unclear, investors are seeking safe haven opportunities in different markets. Gold may still maintain its status as a "safe haven" after a short-term correction, while the crypto market has shown greater resilience driven by policy and institutional support. US stocks are more sensitive to the volatility of technology stocks.