Tags: gold | fed | rate | cuts
OPINION

Gold to Gain as Fed Eyes Cuts

Gold to Gain as Fed Eyes Cuts

Max Baecker By Wednesday, 27 August 2025 01:03 PM EDT Current | Bio | Archive


Federal Reserve Chair Jerome Powell lit up the financial markets when he suggested the Fed could cut interest rates at its September meeting. That possibility sparked a powerful rally on Wall Street. Investors love the idea of cheaper credit and easier money. But while some cheered, others worried about inflation coming back. For those who own physical gold, either outcome is a win.

Stocks Soar on Powell’s Hint

The market reaction was immediate. The Dow Jones Industrial Average surged more than 800 points, at one point touching 900, and reached its first record high of the year. The S&P 500 gained 1.68% and the Nasdaq rose 2.1%, their biggest single day jumps since May. Wall Street’s “fear gauge,” the CBOE Volatility Index, fell 12%. Treasury yields slipped too, with the sensitive two-year note dropping 0.08 points to 3.71% after Powell’s remarks.1

Powell admitted that monetary policy is still “restrictive,” which investors took as a signal that the Fed is ready to shift course. Rates have been stuck between 4.25% and 4.5% since December. And now the Fed appears open to cutting for the first time in nearly a year.

Rising Risks in the Economy

The excitement on Wall Street was clear, but Powell’s words were cautious. He pointed out that the U.S. economy has held up well and the labor market is still strong by some measures. Yet he also warned about growing “downside risks” that could wipe out those gains.

He described the labor market as “a curious kind of balance.” Hiring is slowing. At the same time, the pool of available workers is shrinking. Risks to jobs are rising, and if they hit, layoffs could come fast, and unemployment could spike.

Trade policy and tariffs add another layer of concern. Powell warned they could raise inflation while slowing growth, a dangerous stagflation mix. He did say such price shocks might be temporary, but the Fed faces a tough call about how long to hold rates high.

Inside the Fed, the debate is split. Some officials see a cooling job market and argue for lower rates to boost hiring. Others want to wait and see if tariff-driven inflation sticks around.

Fed Independence in the Spotlight

Powell made it clear that the Fed will act independently. “FOMC members will make these decisions, based solely on their assessment of the data and its implications for the economic outlook and the balance of risks,” he said. “We will never deviate from that approach.”2

That line was a direct response to political pressure. The White House has been pushing hard for aggressive rate cuts. President Trump has argued that lower borrowing costs would help spark the economy and lift the housing market.

Political Pressure and Fed Succession

This Jackson Hole speech comes as the Fed faces heavy political maneuvering. Trump has attacked Powell, talked about firing governors, and pushed for changes at the central bank. One governor resigned earlier this month, and Trump has suggested another could be removed over mortgage fraud allegations.

Looking ahead, Trump is already considering who might replace Powell when his term ends in May 2026. Names being floated include Fed Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman. Both of whom voted for an immediate rate cut in July. Trump has also nominated adviser Stephen Miran to replace outgoing Governor Adriana Kugler. Moves that could tilt the Fed more toward easier money in the months ahead.

Lessons From the Past

Powell admitted his mistake in 2020 to adopt a “flexible average inflation targeting” regime. Fed-speak for allowing inflation to run above the 2% target after years of undershooting. At the time, the Fed called inflation “transitory.” But it wasn’t, and the result was the worst inflation spike in 40 years.3

Now Powell says the Fed is back to its 2% target, no matter the political or market pressure.

Waiting on Data

Despite Wall Street’s confidence, Powell left himself room to change course. A strong rebound in hiring or higher-than-expected inflation could cause the Fed to delay a cut. For now, markets are betting on at least one rate cut in September. But with inflation unpredictable, economic risks rising, and political pressure heating up, the next Fed meeting will be high stakes.

Gold

This is exactly why gold matters. When interest rates fall, gold gains because the “opportunity cost” of holding it also falls. Lower rates weaken the dollar, making gold more attractive to global buyers. And if inflation creeps higher, demand for gold as a hedge only grows stronger. For anyone worried about volatility or stagflation, gold is a safe harbor. A Gold IRA can give your retirement savings that same protection in times like these.

Conclusion

Powell’s speech shows rate cuts are on the table. But the outcome isn’t guaranteed. If rates drop, gold rises. If inflation follows, gold protects your wealth. Either way, gold owners are in a strong position. That’s why now is the right time to consider adding gold to your portfolio. Call American Hartford Gold today at 800-462-0071 to learn more.

_______________
Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.

Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients.

Max's dedication to upholding American Hartford Gold's industry-leading standards is reflected in its accolades. American Hartford Gold has made numerous high-ranking appearances on the prestigious Inc. 5000 List of America’s Fastest-Growing Private Companies. AHG holds an A+ Rating from the BBB and a 5-Star Rating on Trustpilot from thousands of American Hartford Gold reviews. American Hartford Gold is the only precious metals company trusted and recommended by Bill O’Reilly.

AHG offers investment-grade gold and silver coins and bars at competitive prices. Clients also benefit from its buy-back commitment with no back-end fees. To learn more, visit American Hartford Gold.

Notes:

1. https://www.wsj.com/finance/stocks/dow-rises-more-than-800-points-to-first-record-of-2025-9fe99929

2. https://www.foxbusiness.com/economy/fed-chair-jerome-powell-signals-job-market-inflation-outlook-could-allow-interest-rate-cut

3. https://www.wsj.com/opinion/jerome-powell-federal-reserve-framework-inflation-targeting-26deedb0

© 2025 Newsmax Finance. All rights reserved.


MaxBaecker
Federal Reserve Chair Jerome Powell lit up the financial markets when he suggested the Fed could cut interest rates at its September meeting. That possibility sparked a powerful rally on Wall Street. Investors love the idea of cheaper credit and easier money.
gold, fed, rate, cuts
1007
2025-03-27
Wednesday, 27 August 2025 01:03 PM
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