After months of holding interest rates steady, the Federal Reserve is now signaling a shift that investors are watching closely. Following July’s weaker-than-expected Services PMI and a disappointing jobs report, markets are betting heavily on a rate cut as early as September.
According to CME’s FedWatch tool, odds of a cut by Q3 have risen to over 85%. Why does this matter to gold investors? Because lower interest rates reduce the opportunity cost of holding non-yielding assets like gold — making the yellow metal more attractive.
Historically, dovish Fed policies weaken the U.S. dollar, which in turn boosts demand for gold globally. As of early August, gold is holding steady near $3,370 per ounce, with potential upside if the Fed follows through with easing.
For long-term investors, this environment presents a classic setup: economic uncertainty, central bank accommodation, and rising demand for safe havens. If the Fed cuts in Q3 and Q4, gold could climb even higher by year’s end.
