On Tuesday (September 16), Asian markets saw investors bracing for the Federal Reserve's resumption of its easing cycle, with spot gold prices rising to $3,689.41 per ounce, a new all-time high and approaching $3,700 per ounce. While the market has already anticipated a rate cut, one fund manager suggested the central bank's actions could be more aggressive than the market anticipates.

In a recent interview, Robert Minter, head of ETF strategy at Abdn, said gold prices are on track to hit his year-end target of $3,700 an ounce, but the rally could accelerate if the Federal Reserve unexpectedly cuts interest rates by 50 basis points.



While the likelihood remains small (the CME FedWatch tool puts the probability at less than 5%), Minter noted that just a few weeks ago, the possibility wasn't even being considered.

Adding to the uncertainty are rising fears of a recession. Minter also highlighted growing criticism of the Federal Reserve by President Trump and his administration, saying the central bank appears slow to respond to changing economic conditions.

But he believes it reflects a deeper flaw in the extent to which U.S. monetary policy relies on lagged data.

"Powell has made a lot of mistakes, but who wouldn't, given what he's had to deal with over the years? He's faced problems that no one has ever faced," he said. "Now he's trying to judge the state of the economy by looking at outdated economic data, which is like driving a car by looking in the rearview mirror."

Last week, the Bureau of Labor Statistics revised its figures, showing that earlier employment figures had been overstated. Nearly 1 million jobs were cut, triple the 10-year average and the largest downward revision on record.

Minter said the data revisions, combined with rising jobless claims and weak summer job growth, increase the risk of aggressive action from the Federal Reserve this week.

“The Fed has an opportunity to take a dramatic and aggressive step and cut rates by 50 basis points,” he said. “A 50 basis point cut would traditionally be seen as a panic move, but they have the data to justify a bigger move and they can come out and say they are trying to get ahead of any recession threat.”

Even without a sudden rate cut, the Fed could still send a strong signal in its latest economic outlook and dot plot forecasting a prolonged easing cycle through 2026, Minter said. That could also push gold prices above his target, he added.

"There's no question that interest rates have to come down," he said. "The two-year Treasury yield suggests the federal funds rate is 100 basis points too high."

Minter is also bullish on silver, predicting it will follow gold higher on the back of strong industrial demand.

“I like silver because I’m bullish on the growth prospects and growing capital spending in emerging markets,” he said. “Emerging markets are investing in energy independence and security, which will continue to drive demand for silver.”


Spot gold daily chart

At 13:58 Beijing time on September 16, spot gold was quoted at $3680.39 per ounce.