With growing expectations that the U.S. Federal Reserve may cut interest rates in the coming months, global markets are debating the future trajectory of gold and the U.S. dollar, two assets closely tied to monetary policy and macroeconomic trends.
اضافة اعلان
Weak U.S. Data Shifts Expectations
Recent U.S. employment data showed the economy added only 22,000 jobs in August, far below the expected 150,000, while over 86,000 layoffs were recorded—the highest since the COVID-19 pandemic.
These figures reinforced investor expectations that the Fed may accelerate rate cuts to avoid a sharp economic slowdown.
According to Reuters, markets are now pricing in the possibility of three rate cuts by the end of 2025, starting from September or October meetings, which has quickly influenced global asset movements.
Gold Shines Amid Dollar Weakness
Traditionally a safe-haven asset, gold has become more attractive as real yields on U.S. Treasuries decline due to anticipated rate cuts.
James Stanley, analyst at Daily FX, noted:
"Gold benefits from a double boost: a weaker dollar and lower real yields. If rate cuts materialize, gold could retest $2,500 per ounce in 2025."
Gold has already risen over 4% since early August, with investment banks like Goldman Sachs forecasting a price range of $2,350–$2,550 per ounce if dollar pressures persist.
Dollar Under Pressure
Conversely, the U.S. dollar faces increasing headwinds. Weak labor market data and declining core inflation reduce its appeal, especially as other regions, like the Bank of England and the European Central Bank, maintain tighter monetary policies.
Mark Chandler, chief currency strategist at Bannockburn Global Forex, stated:
"The dollar is in a medium-term downtrend. Even with short-term rebounds, the overall trend remains downward as the Fed approaches a rate-cutting cycle."
The DXY dollar index fell roughly 1.8% last month, marking its worst monthly performance of the year.
Other Beneficiaries: Stocks and Bonds
Rate-cut expectations also supported U.S. equities, with the Nasdaq rising 3% last week, driven by liquidity-sensitive tech stocks.
Meanwhile, U.S. Treasury bonds faced mixed pressures. Although monetary easing typically supports bonds, high debt issuance and inflation expectations pushed 10-year yields down to around 3.9%.
Some analysts caution about a stagflation scenario, where growth slows without a corresponding drop in inflation. Edward Moya of OANDA warns:
"If the economy weakens more than expected while inflation remains above 3%, the Fed will face a difficult position, potentially causing wild swings in both gold and the dollar."
Bottom Line
The paths of gold and the dollar are diverging: gold gains from falling yields and a weaker dollar, while the dollar suffers under expectations of broad monetary easing.
Markets are betting on higher gold and a weaker dollar, but the ultimate outcome will hinge on macro-economic developments and the Fed’s ability to cut rates without triggering stagflation.
"The bet on gold depends on whether the Fed can lower rates without falling into a stagflation trap."
