The Federal Reserve may be moving closer to its first interest rate cut of the year, and gold is already shining brighter on the prospect. In his closely watched speech at Jackson Hole, Fed Chair Jerome Powell acknowledged that the balance of risks in the U.S. economy is shifting. A still-solid labor market is holding up growth, but tariffs and sticky inflation remain potential headwinds. With borrowing costs sitting at their highest levels in decades, Powell suggested that the Fed may be ready to cut rates as soon as September.
Gold prices jumped after the comments as traders added to bets on a September cut. Lower rates make nonyielding assets like gold more appealing, since the opportunity cost of holding bullion falls when cash and bonds pay less.
Forecasts for the precious metal are climbing fast. UBS now sees prices reaching $3,700/oz. by next summer, while BNP Paribas strategist Philippe Gijsels has gone further, suggesting gold could break past $4,000/oz. He argues that President Trump’s confirmation that bullion is exempt from new reciprocal tariffs clears the way for gold prices to soar even higher.
The stars seem to be aligning for gold: a softer Fed, geopolitical uncertainty, and steady demand from global central banks. If these forces persist, gold’s recent gains may be the beginning of another record-breaking run.
