The US economy added just 57,000 jobs in June, roughly half the 110,000 that economists had penciled in. Gold responded by doing what gold does when the Fed’s hawkish case starts falling apart: it rallied more than 2% and parked itself above $4,100 per ounce.

The miss wasn’t subtle. It was the kind of number that makes rate-hike narratives look like they were written in pencil. And traders moved fast, slashing the probability of a September Fed rate increase from roughly 66-67% down to about 50-51% on the CME FedWatch tool.

The labor market is cooling, and markets are repricing everything

The unemployment rate held at 4.2%, which reinforces the picture of an economy that’s losing momentum rather than gaining it.

David Meger of High Ridge Futures captured the consensus view among commodity analysts. Lower jobs numbers reduce the likelihood of rate hikes, full stop. In a world where the Fed stays on hold, or even starts thinking about cuts, gold’s opportunity cost drops.

The mechanics are straightforward. Gold pays no interest. When rates are high or expected to go higher, investors face a real cost for holding it instead of Treasuries or money market funds. When rate expectations drop, that cost shrinks, and gold becomes relatively more attractive. The June payroll miss just made gold a lot more attractive in one afternoon.

What this means for Bitcoin and the broader crypto market

Analysts at CoinDesk have described the current setup as a “debasement trade.” When investors believe that fiat currencies will lose purchasing power, either through inflation or loose monetary policy, they rotate into hard assets. Gold is the original hard asset. Bitcoin is the digital version. Both are seeing demand from the same underlying anxiety about where monetary policy is headed.

The logic chain is simple. Weak jobs data means the Fed is less likely to hike. A Fed that isn’t hiking means real yields stay lower. Lower real yields mean the dollar faces headwinds. A weaker dollar environment historically benefits both gold and Bitcoin.

What investors should watch next

The September Fed meeting is now essentially a coin flip. That’s a dramatic shift from just a week ago, when markets were pricing in a rate hike as the most likely outcome.

For gold bulls, the key level to watch is $4,100. If prices consolidate above that mark through the next round of data releases, it suggests the rally has structural support rather than being a one-day reaction trade. A break below would indicate that traders still think the Fed has room to tighten.

One risk worth flagging: markets have a habit of overreacting to single data points. One weak payrolls report doesn’t mean the economy is falling off a cliff. If July’s numbers bounce back to something closer to expectations, the rate hike probabilities could snap right back to where they were.