US September PCE Inflation Rises to 3.6%, Gold Drops Below $4,000, Bitcoin Falls Below $77,000

TradingKey - On October 30, gold (XAUUSD) and Bitcoin (BTC) continued to face pressure. U.S. September PCE inflation data showed year-over-year increases in both headline and core inflation. Coupled with the Federal Reserve keeping interest rates unchanged while signaling a hawkish stance, market expectations for another rate hike in December further heated up. After dropping over 1% in the previous trading session, spot gold briefly fell below $4,000 intraday today, while Bitcoin moved further lower, briefly falling below $77,000 during intraday trading to touch a six-week low.

Bitcoin Daily Price Chart, Source: TradingView

According to data released by the U.S. Department of Commerce, the overall PCE price index rose 0.5% month-over-month in September, up from 0.3% in August, and climbed 3.6% year-over-year, higher than the previous value of 3.4%. Core PCE, which excludes food and energy prices, rose 0.3% month-over-month and 3.1% year-over-year, both increasing from previous readings. Although all figures were in line with market expectations, headline inflation accelerated for consecutive periods and core inflation showed no noticeable cooling, indicating that U.S. price pressures persist.

Meanwhile, U.S. third-quarter annualized GDP growth reached 3.4%, exceeding market expectations of 3.2% and reflecting continued economic resilience. Against the backdrop of rising inflation and strong economic growth, room for further Fed rate cuts is constrained. The Federal Reserve had previously maintained interest rates at 3.75%-4.00%, but two officials advocated a 25-basis-point rate hike. According to CME data, the market expects the probability of a Fed rate hike in December to remain at approximately 74.9%.

Because gold itself does not generate interest yield, rising market expectations for interest rates to remain higher for longer diminish the relative appeal of holding gold for investors. As of the Asian trading session on October 30, gold prices fell to a low of $3,996.45.

As for Bitcoin, beyond the tightening macro interest rate environment, the cryptocurrency market was also impacted by a security incident at Binance. Binance had previously stated that it was investigating potential security issues, and relevant institutions have frozen over $2.5 billion in crypto assets. Affected by this, widespread sell-offs occurred in the cryptocurrency market, with Bitcoin dropping to an intraday low of $76,658, touching a six-week low.

In the short term, the September PCE data has further reinforced market expectations that the Federal Reserve will maintain high interest rates, leaving both gold and Bitcoin under a degree of pressure. Investors need to pay attention to upcoming speeches by Fed officials, U.S. inflation data, and capital flows in the cryptocurrency market, as these will serve as key factors influencing the movement of both asset classes.