Markets are repricing rate expectations after weak June payrolls, lifting Bitcoin and precious metals as the opportunity cost of holding non-yielding assets declines.
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Gold bounces to $4,200 as Bitcoin rallies on delayed rate hikes
Markets are repricing rate expectations after weak June payrolls, lifting Bitcoin and precious metals as the opportunity cost of holding non-yielding assets declines.
Gold bounced toward $4,200 an ounce as Bitcoin and silver joined a broad rally after markets repriced expectations for Federal Reserve rate hikes following weaker-than-expected June payrolls data.
"The Fed must take outright ownership and accountability for fundamentally missing the inflation threat over the past five years," Kevin Warsh, chair of the Federal Reserve, said in a blunt assessment that forced bond traders to recalibrate.
The bond market has undergone a dramatic repricing. The 10-year Treasury yield climbed steadily as traders priced in two Fed rate hikes by year-end — a 1% swing in expectations from January, when the consensus was pricing in two cuts. Bank of America went further, forecasting three rate hikes before the close of 2026. Yet after June payrolls showed hiring slowed sharply while unemployment fell to 4.2% on shrinking participation, investors scaled back bets on a rate increase this year, according to Bloomberg.
The repricing matters because delayed rate hikes reduce the opportunity cost of holding non-yielding assets like Bitcoin and precious metals. For Bitcoin, which has suffered five consecutive red monthly closes and sits flat over an almost five-year window, the macro shift offers a potential catalyst. Gold, after registering its largest single-month decline since 1975, and silver, down more than 50% from recent highs, are testing whether the tailwind can reverse their second-quarter losses.
The shift in rate expectations comes as Warsh has aggressively refocused the central bank on its 2% inflation mandate. Domestic inflation has hovered above the Fed's target for 63 consecutive months, averaging 4% per year since 2019, creating a bind: raising rates to fight inflation directly increases borrowing costs on $1.2 trillion in annualized sovereign debt interest payments.
President Donald Trump gave Warsh leeway on rates after the weak payrolls print, a shift from months of hectoring former Chair Jerome Powell to cut. Trump also vowed to restart efforts to oust governor Lisa Cook after the Supreme Court ruled 5-4 to keep her in post.
For Bitcoin, the macro repricing arrives against a backdrop of structural developments. Fannie Mae announced it will soon accept crypto-backed mortgages for the first time. MicroStrategy and Tokyo-listed Metaplanet continue to issue corporate credit to add bitcoin to their balance sheets. The crypto CLARITY Act remains pending in Washington.
JPMorgan slashed its gold forecast to $4,500 an ounce in the fourth quarter from a prior $6,000 year-end call, though it retained a long-term bullish view on central bank buying.
This article is for informational purposes only and does not constitute investment advice.
