David Einhorn of Greenlight Capital expects the Federal Reserve to cut interest rates more than anticipated this year, giving him greater confidence to bet on gold.

According to the CME FedWatch Tool, although expectations for a rate cut have declined following the release of a much better-than-expected January jobs report, traders still expect a greater than 88% chance of the Fed cutting rates by 25 basis points twice before the end of the year.



But Einhorn said it was “wrong” for the market to interpret the latest jobs data as a reason not to cut rates. In fact, he believes there could be more rate cuts , as he expects Warsh, who will succeed Powell as Fed chairman, to be able to persuade the committee to do so.

"If we have 4% or 5% inflation, of course he won't be able to convince people, otherwise he'll argue about productivity," Einhorn said on Wednesday. He added that he believes "even if the economy is overheating," Warsh will take a stance of cutting interest rates.

He continued, "I believe there will be well more than two interest rate cuts by the end of this year. "

This hedge fund manager holds gold, which was sold off at the end of last month after Trump announced Warsh's nomination as Federal Reserve Chairman, a move that eased Wall Street's concerns about the Fed's independence.

Gold, often seen as an inflation hedge, has since seen some recovery, with gold futures rising more than 17% this year. Previously, gold prices surged more than 60% in 2025 due to threats to central bank independence, heightened geopolitical tensions, and trade policy instability. Since 2024, it has soared by more than 120%.

In 2008, just months before Lehman Brothers declared bankruptcy, Einhorn rose to prominence by betting against the company at the Thorne Investment Conference. He pointed out that gold had actually been rising in recent years because it "had become a reserve asset held by central banks around the world."

He said, "U.S. trade policy is very volatile, which has led other countries to say that they want to settle their trade in something other than the dollar."

He said that one reason to hold gold in the long run is that the relationship between our current fiscal and monetary policies "makes no sense." He also said that the currencies of other major developed countries in the world are "as bad as, or even worse than, the dollar."

Last month, the dollar suffered its biggest one-day drop since April 2025 after Trump said he was not worried about the recent weakness of the dollar.

He said, "Sometime in the next few years, some major currencies may experience some problems."

Einhorn believes betting on further rate cuts is "one of the best trades right now," and he has also gone long on secured overnight funding rate (SOFR) futures, which is essentially a bet that short-term rates will continue to fall.

At 15:42 Beijing time, spot gold was trading at $5058.40 per ounce.