The non-farm payroll report is the most important data this week.
Written by: Mamun Niu, Deep Tide TechFlow
Gold: From "Epic Crash" to "Epic Rebound"
Spot gold closed today at $4,826/ounce, soaring 3.56% in a single day.
This is a textbook "V-shaped reversal." Last Friday, gold experienced its most severe single-day drop since 1980, plummeting from a historic high of $5,600 to around $4,400, a decline of over 10%. Silver fared worse, crashing 28% in a single day, marking its largest drop in over 40 years.
The trigger for the crash was, of course, Trump's nomination of Kevin Warsh as the next Federal Reserve Chairman.
Who is Warsh? A former Fed governor, a typical hawk advocating for tighter monetary policy. The market's logic chain is: Warsh takes office → interest rates remain high or even increase → the dollar strengthens → gold loses its appeal.
But today's rebound indicates something else: the market is re-pricing.
Investors have realized two things:
- Warsh's nomination does not equal immediate tightening. He won't take office until May at the earliest, and the current panic selling may be excessive.
- The "de-dollarization narrative" for gold remains unchanged. Central banks around the world have been hoarding gold over the past three years, not because of Fed easing, but due to long-term distrust in the dollar credit system. Trump's interference with the Fed's independence has only intensified this concern.
From a technical perspective, last Friday's crash triggered massive stop-losses and margin calls (CME raised gold futures margin from 6% to 8%, and silver from 11% to 15%). This mechanical selling exacerbated the decline but also cleared out leveraged bubbles, creating conditions for a rebound.
Today's rebound is essentially a "wrongful sell-off correction." The long-term logic for gold still holds: geopolitical uncertainty, long-term depreciation pressure on the dollar, and the trend of de-dollarization among countries. JPMorgan reiterated today: gold target price of $6,300 by the end of 2026. Deutsche Bank also maintains a target price of $6,000.
In the short term, gold may fluctuate in the $4,500-$5,000 range, awaiting clear signals from the Fed meeting at the end of February.
Bitcoin: Struggling in the $78,000 "Quagmire"
Bitcoin is currently priced at $78,700, up 2% in 24 hours, but down over 10% for the week.
Bitcoin briefly fell below $75,000 over the weekend, hitting a near two-month low. Although it rebounded slightly today, it remains in a "bleeding state."
Why the drop?
- Deteriorating macro environment. The collapse of safe-haven sentiment triggered by gold's plunge affected all risk assets. Although Bitcoin is often referred to as "digital gold," it behaves more like a high-beta tech stock during panic.
- Leverage liquidation. Over the weekend, with weak liquidity, more than $500 million in long positions were forcibly liquidated. The thin market depth means that a small amount of selling pressure can break through key support levels, triggering a chain of liquidations.
- Lack of new catalysts. Trump's promised "strategic Bitcoin reserve" has yet to make any substantial progress. The market is watching: is this serious, or just pre-election posturing?
Ethereum is even weaker, currently priced at $2,340, down 19% for the week. The ETH/BTC exchange rate has dropped to 0.030, hitting a multi-year low. The challenges facing the Ethereum ecosystem have not improved; unless a killer application emerges, its relative weakness against Bitcoin is unlikely to change.
Altcoins are all in distress. Aside from a few projects with real revenue (like Hyperliquid), most altcoins are in a "survival mode." The market's "wealth disparity" has become extreme: funds are only willing to pay for Bitcoin and a very few quality assets.
Bitcoin's short-term support is at $75,000; if it breaks below, the next stop is $70,000. Resistance is in the $82,000-$85,000 range.
U.S. Stocks: Rebounding from Panic, but the Tightrope Dance Has Just Begun
On February 3 (Monday), the three major U.S. stock indices closed higher.
- Dow Jones: 49,407 points (+1.05%, +515 points)
- S&P 500: 6,976 points (+0.54%)
- Nasdaq: 23,592 points (+0.56%)
This is a typical "panic correction rebound." After last Friday's 11% drop in gold and a 28% drop in silver triggered panic selling in the market, today the market rebounded strongly upon confirming that "the apocalypse is not coming."
Three supporting forces:
Manufacturing data unexpectedly strengthened. The U.S. January ISM Manufacturing PMI rose to 52.6, far exceeding the expected 48.3, marking the first return to expansion territory in a year. This gave the market confidence that "the economy is not that weak."
AI infrastructure stocks led the gains. Apple rose 4.1%, Micron Technology rose 5.5%, and SanDisk surged 15.4%. The strength of storage chip stocks reflects the market's continued optimism about demand for AI infrastructure. Although Nvidia fell 2.9% due to news of its "suspension of a $100 billion investment in OpenAI," the overall AI narrative has not broken.
Transportation stocks hit historical highs. The Dow Jones Transportation Index rose about 2%, with United Airlines and Delta Airlines up 4-5%, and FedEx reaching a historical high since its IPO in 1978. The strength of transportation stocks is usually a leading indicator of accelerated economic activity.
But the cracks within the market are clearly visible:
Disney plummeted 7%, with earnings reports showing declining profits and rising costs. The impact of consumer slowdown on the entertainment industry is beginning to show.
Strategy fell 6.7%, reflecting the continued weakness in cryptocurrency.
More critically, the non-farm payroll data originally scheduled for release on February 6 has been postponed. This rare situation means the market will be "blind flying" for a longer time—lacking key data, the uncertainty about whether the Fed will cut rates in March (currently about a 40-50% probability) will increase.
The core contradiction in the market: the crisis of the Fed's independence
The recent violent fluctuations in all assets stem from the same question: Can the Fed remain independent?
Trump's nomination of Warsh as Fed Chairman is itself a strong political signal. Warsh is a longtime friend of Trump and is seen as someone who would be more obedient to the White House. This breaks the traditional image of the Fed's "political neutrality."
The market is worried about two extreme scenarios:
- Scenario A: Warsh is truly hawkish. Interest rates remain high for a long time, the dollar strengthens, and gold and Bitcoin continue to be under pressure, but U.S. stocks decline due to corporate profits being eroded by high interest rates. This is a "total loss" situation.
- Scenario B: Warsh becomes "Trump's tool." Under political pressure, he is forced to cut rates, in conjunction with fiscal expansion. Short-term risk assets may rally, but long-term, the dollar's credit collapses, and inflation spirals out of control. This is "chronic poison."
In either scenario, the Fed's credibility will be damaged. This is the true reason for the market's panic.
Today's rebound in gold is essentially betting on "Scenario B."
With the Fed's independence weakened and the long-term credit of the dollar declining, the value of gold as the "ultimate currency" increases.
The continued weakness of Bitcoin is due to its "unappealing" position in this narrative: if the Fed is truly hawkish, tightening liquidity is detrimental to risk assets; if the Fed becomes a political tool, Bitcoin's "decentralization" narrative seems ironic—if the Fed cannot maintain its independence, how can it claim to combat "fiat currency hegemony"?
Key Events This Week: Data Determines Direction
February 4 (Tuesday): U.S. ADP Employment Data, ISM Services PMI
February 5 (Wednesday): U.S. Initial Jobless Claims
February 6 (Thursday): Non-Farm Payroll Report, University of Michigan Consumer Sentiment Index
The non-farm payroll report is the most important data this week.
If the data is strong (new jobs +250,000), the market will interpret it as "the Fed has no reason to cut rates," the dollar will strengthen, and gold and Bitcoin will be under short-term pressure.
If the data is weak (new jobs below 150,000), the market will bet on "the Fed being forced to cut rates," risk assets will rebound, and gold will continue to rise.
Current market consensus: no rate cut in February, with the possibility of a rate cut in March rising to around 40%.
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