Strategists: Fed's aggressive rate cuts will push gold prices back to all-time highs by year-end
2025-08-13 15:01:14
Gold prices still have solid support above $3,300, and ING said it is only a matter of time before gold prices break out of consolidation and retest record highs.
In her monthly gold report, ING commodity strategist Ewa Manthey raised her gold price forecasts due to weakening momentum in the U.S. labor market and persistent inflationary pressures. She now expects gold prices to average $3,400 and $3,450 an ounce in the third and fourth quarters, respectively, up from her previous forecast of $3,200 for those two quarters.
Manthey expects gold prices to climb above $3,500 an ounce in the first quarter of next year (more than 9% higher than her previous forecast), with the average price rising from $3,175 to $3,512 an ounce in 2026. The upward forecast comes as ING expects the Federal Reserve to cut interest rates sharply in the second half of 2025.
“Gold could be poised for another record high as bets on U.S. rate cuts intensify,” she said. “Our U.S. economists now expect three rate cuts over the rest of the year and two more in early 2026, which is more aggressive than the market is pricing in. Rate cuts typically boost gold, which doesn’t pay interest, compared to other assets. ”
Markets are pricing in a 90% chance of a Fed rate cut next month and a 50% chance of three rate cuts by year-end, according to the Chicago Mercantile Exchange (CME) FedWatch tool. Concerns about the Fed's independence could further support safe-haven demand, Manthey said.
“Director Kugler’s resignation ... may give President Trump the opportunity to appoint someone more aligned with his rate-cutting agenda,” she said. “Certainly, that person won’t be a fan of Chair Powell, whose term ends next May. This all adds to concerns about the Fed’s independence, which has been driving up gold prices.”
Last week, Trump appointed Milan, chairman of the Council of Economic Advisers, to replace Kugler.
Manthey also pointed to strong central bank gold buying and growing investor interest. “We believe central banks will continue to increase their gold reserves given the still uncertain economic environment and their attempts to reduce their reliance on the US dollar,” she said.
She noted that in the first half of this year, investment demand for gold ETFs grew at the fastest pace since early 2020 , although gold holdings were still about 300 tons below the record high set five years ago.
“ Central banks are still buying, Trump’s trade war is still going on, geopolitical risks are still rising, and ETF holdings continue to expand, all of which are supporting current gold price levels,” she said. “A Fed rate cut could be the catalyst that reignites the record rally. ”
Spot gold daily chart Source: Yihuitong
At 15:00 Beijing time on August 13, spot gold was quoted at $3356.32 per ounce.
In her monthly gold report, ING commodity strategist Ewa Manthey raised her gold price forecasts due to weakening momentum in the U.S. labor market and persistent inflationary pressures. She now expects gold prices to average $3,400 and $3,450 an ounce in the third and fourth quarters, respectively, up from her previous forecast of $3,200 for those two quarters.
Manthey expects gold prices to climb above $3,500 an ounce in the first quarter of next year (more than 9% higher than her previous forecast), with the average price rising from $3,175 to $3,512 an ounce in 2026. The upward forecast comes as ING expects the Federal Reserve to cut interest rates sharply in the second half of 2025.
“Gold could be poised for another record high as bets on U.S. rate cuts intensify,” she said. “Our U.S. economists now expect three rate cuts over the rest of the year and two more in early 2026, which is more aggressive than the market is pricing in. Rate cuts typically boost gold, which doesn’t pay interest, compared to other assets. ”
Markets are pricing in a 90% chance of a Fed rate cut next month and a 50% chance of three rate cuts by year-end, according to the Chicago Mercantile Exchange (CME) FedWatch tool. Concerns about the Fed's independence could further support safe-haven demand, Manthey said.
“Director Kugler’s resignation ... may give President Trump the opportunity to appoint someone more aligned with his rate-cutting agenda,” she said. “Certainly, that person won’t be a fan of Chair Powell, whose term ends next May. This all adds to concerns about the Fed’s independence, which has been driving up gold prices.”
Last week, Trump appointed Milan, chairman of the Council of Economic Advisers, to replace Kugler.
Manthey also pointed to strong central bank gold buying and growing investor interest. “We believe central banks will continue to increase their gold reserves given the still uncertain economic environment and their attempts to reduce their reliance on the US dollar,” she said.
She noted that in the first half of this year, investment demand for gold ETFs grew at the fastest pace since early 2020 , although gold holdings were still about 300 tons below the record high set five years ago.
“ Central banks are still buying, Trump’s trade war is still going on, geopolitical risks are still rising, and ETF holdings continue to expand, all of which are supporting current gold price levels,” she said. “A Fed rate cut could be the catalyst that reignites the record rally. ”
Spot gold daily chart Source: Yihuitong
At 15:00 Beijing time on August 13, spot gold was quoted at $3356.32 per ounce.
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