The direct impact of interest rate cuts on gold:
Interest rates are negatively correlated with gold: A rate cut reduces the attractiveness of dollar assets, and funds may flow into gold and other non-yielding assets.
The US dollar index weakens: Gold is priced in dollars, and a depreciation of the dollar will push up gold prices.
Real interest rates decline: Rate cuts may exacerbate inflation expectations, and a decrease in real interest rates enhances the cost advantage of holding gold.
The specificity of short-term market reactions:
Pullback after expectations are realized: If the rate cut has already been priced in by the market, gold prices may experience profit-taking after the announcement. For example, after the rate cut in December 2024, gold prices fell by as much as 2%.
Federal Reserve policy signals: If a “hawkish rate cut” signal is released (such as slowing the pace of rate cuts), it may temporarily suppress gold prices.
Key factors in long-term trends: $BTC
Geopolitical risks: Conflicts in the Middle East, Russia, and Ukraine will strengthen the safe-haven demand for gold.
Global central bank gold purchases: Continued purchases of gold provide support for gold prices.
Silver linkage effect: Strong industrial demand for silver (such as photovoltaics, AI) may drive up gold prices.
