Bitcoin moved in a narrow range on Wednesday, but resumed a short rally that surpassed $116,000, despite investors turning cautious amid the start of the US government shutdown and uncertainty about the timing of key economic data releases.

The world’s largest cryptocurrency rose by 0.5% to trade at $116,714.6 by 01:27 GMT, nearing its highest level in ten days.

Bitcoin had seen a strong rebound earlier in the week driven by buying from large investors (whales), after suffering sharp losses in the previous week due to selling pressure and broad liquidations.

US government shutdown begins; concerns rise over jobs data

The US federal government began a partial shutdown at 04:00 GMT after lawmakers failed to reach an agreement on a temporary funding bill.

The Senate late Tuesday rejected a Republican bill by a 55–45 vote, short of the 60 votes needed to pass, leaving federal agencies without funding.

President Donald Trump defended the shutdown, arguing it would give his administration scope to take “irreversible” actions, including shutting down some federal programs and cutting spending. His remarks signaled a prolonged political standoff that could deepen the economic impact.

The shutdown added uncertainty over the release of the US nonfarm payrolls report scheduled for Friday. Any delay or disruption to this report would further cloud labor market expectations and complicate the Federal Reserve’s upcoming monetary policy decisions.

Bitcoin had climbed in the previous session, supported by seasonal optimism linked to October — known as “Uptober” — but the rally stalled amid broader caution.

Cryptocurrencies, often viewed as high-risk assets, remain under pressure due to uncertainty tied to US fiscal policy and expectations for the monetary policy outlook.

Oil prices steadied on Wednesday after falling for two consecutive days, as investors weighed OPEC+ plans for a larger production increase next month against data from the United States and Asia showing signs of weakening demand.

Brent crude futures for December delivery fell 4 cents to $65.99 a barrel by 10:37 GMT. US West Texas Intermediate crude declined 5 cents to $62.32 a barrel. Both contracts had dropped about 1% earlier in a volatile trading session.

On Monday, both Brent and WTI closed down more than 3% in their biggest daily loss since August 1, before extending the decline on Tuesday with an additional 1.5% drop each.

Genev Shah, analyst at Rystad, said that the drop in oil prices reflects market expectations of a similar increase in OPEC+ output during November, at a time when demand indicators in the United States and Asia have started to weaken. He added: “The pace of drawdowns in US inventories has slowed, which could change the previous upward trend.”

According to three sources familiar with the talks, OPEC+ could agree to raise production by as much as 500,000 barrels per day in November, three times the planned increase for October, as Saudi Arabia seeks to regain market share.

However, OPEC denied in a post on X (formerly Twitter) the accuracy of media reports about plans to raise production by 500,000 barrels per day, calling them misleading.

In the United States, an industry report showed that crude inventories fell, while gasoline and distillate stocks rose in the week ending September 26, according to market sources citing American Petroleum Institute estimates on Tuesday.

In Asia, the world’s largest oil-consuming region, data showed a contraction in manufacturing activity in most major economies during September, raising concerns about weakening fuel demand.

Record levels of US oil production, anticipation ahead of the OPEC+ meeting scheduled this week, and market caution due to the US government shutdown also pressured prices, according to UBS analyst Giovanni Staunovo.

The US government shut down most of its activities on Wednesday after deep partisan divisions prevented Congress and the White House from reaching a budget funding agreement, which government agencies warned would halt the release of the September jobs report along with other critical economic data.

In the same context, Tamas Varga, analyst at PVM Oil Associates, said that attention is also turning to Russian supply and export disruptions caused by ongoing and successful Ukrainian attacks.

The US federal government is experiencing a partial shutdown as a result of the failure to pass budget appropriations to begin the new fiscal year. The president threatened not only to impose mandatory furloughs on many “non-essential” government employees, but to dismiss them permanently. It is noted that as of yesterday, nearly 150,000 federal employees had accepted the government’s financial settlement offer to terminate their services.

The longest government shutdown in this recurring political drama lasted 35 days during former President Donald Trump’s first term. Concerns are rising that this current shutdown could also extend for a long period. In the foreign exchange markets, the US dollar appeared to be moving in a narrow and mixed range, regaining some stability in late European trading after initially facing a wave of selling. The US dollar also shows relative strength against most emerging market currencies.

In contrast, the rise of the Japanese yen, which has been the strongest among G10 currencies in recent days, put pressure on Japanese equities. But other Asia-Pacific markets moved higher, with Australia representing the main exception today, while markets in China and Hong Kong remained closed for the national holiday. In Europe, the Stoxx 600 index rose for the fourth consecutive session, marking its longest winning streak since last May.

US Dollar

After three days of decline, the US dollar index reached the 38.2% retracement level of the rally following the Federal Reserve meeting, at 97.70 points.

The 50% retracement is located near 97.40 points, which the index approached today, while the 61.8% retracement is positioned slightly below 97.15 points. Forecasts suggest that the 97.70–97.80 area may form a near-term ceiling for the index. With large parts of the federal government shut down, reliance on private sector data is increasing.

Economic Data

The Mortgage Bankers Association will release its weekly data on mortgage applications, while the final reading of the September manufacturing PMI, the ISM manufacturing index, and auto sales figures will also be released, all from non-governmental sources. Most likely, the private-sector jobs report from ADP is the most important today, as it has proven more accurate in predicting Bureau of Labor Statistics (BLS) results than economists’ forecasts.

In the first eight months of the year, ADP estimated that the US private sector added an average of 80.4 thousand jobs per month. With revisions, the BLS estimated a closer average of 74 thousand jobs. In 2024, the BLS estimated that the private sector created about 130 thousand jobs per month on average, while ADP estimated the number at more than 144 thousand jobs. Auto sales data are expected to be released gradually throughout the day.

Bloomberg’s median survey forecast points to an annualized pace of 16.2 million vehicles. As of August, the average stood at 16.26 million, compared to 15.52 million vehicles during the first eight months of 2024.

Gold prices rose in the European market on Wednesday, extending gains for the fifth consecutive session, continuing to smash records and coming very close to reaching the $3,900 per ounce barrier for the first time in history, supported by the sharp decline of the US dollar after the government shutdown came into effect in the United States.

In addition, expectations that the Federal Reserve may cut interest rates twice before the end of this year provided support. To re-price those expectations, markets are awaiting the release of more key data on the state of the US labor market, which the Federal Reserve relies on heavily in determining its monetary tools.

Price Overview

• Gold prices today: Gold rose by 0.65% to ($3,884.17) as an all-time high, from the opening level of ($3,859.01), with a low of ($3,853.48).

• At Tuesday’s settlement, gold prices recorded a gain of 0.7%, marking the fourth consecutive daily increase, driven by concerns over the US government shutdown.

Massive Monthly Gain

Over the course of September trading, gold prices rose by about 12%, marking the second consecutive monthly gain and the largest monthly increase since August 2011.

These monthly gains, the biggest in 14 years, are attributed to strong safe-haven demand amid financial stability concerns in Europe, the UK, and the US, in addition to escalating global geopolitical tensions and expectations of US interest rate cuts.

US Dollar

The US dollar index fell on Wednesday by 0.45%, deepening its losses for the fourth consecutive session, hitting a one-week low at 97.48 points, reflecting continued weakness of the US currency against a basket of major currencies.

This decline came after the US government shut down after midnight, following Congress’ failure to pass funding bills, as Trump, the Republican, and the Democratic parties were unable to reach a last-minute temporary deal.

President Donald Trump warned Democrats in Congress on Tuesday that allowing a federal government shutdown would enable his administration to take “irreversible” actions, including shutting down key programs.

US Interest Rates

• Tuesday’s job openings report indicated a slight increase in vacancies in August, alongside a slowdown in hiring, pointing to weakening labor market strength.

• Following the data and according to CME’s FedWatch tool: pricing of probabilities for a 25-basis-point rate cut at the October meeting rose from 90% to 95%, while pricing of probabilities for holding rates unchanged fell from 10% to 5%.

• To re-price those expectations, markets are awaiting further key US labor market data later today with private payrolls, Thursday’s weekly jobless claims, and Friday’s September non-farm payrolls report.

Outlook for Gold

• Nicholas Frappell, global head of markets at ABC Refinery, said gold is benefiting from “concerns related to a weaker dollar, the political situation tied to the US government shutdown crisis, and broader geopolitical uncertainty.”

• Michael Hsueh, precious metals analyst at Deutsche Bank, said with reference to the rise in gold prices: “It is difficult to predict an immediate end, and we expect further strength in the near term.”

SPDR Fund

Gold holdings with SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose yesterday by 1.15 metric tons, marking the third consecutive daily increase, bringing the total to 1,012.88 metric tons, the highest since July 15, 2022.