Expert: Gold on Track to Surpass $5,000 After Fed Rate Cut

John Luca, a gold market expert, said that the Federal Reserve’s decision to cut interest rates by 25 basis points enhances gold’s appeal as a safe-haven asset, especially amid high inflation expectations and volatile global markets.

Luca forecast that gold prices could surpass $5,000 per ounce in 2026, noting that investors will continue turning to gold to strengthen their portfolios against market volatility and reduce risk.

He added:"The split among Federal Reserve members reflects uncertainty in monetary policy, which in turn supports demand for gold and increases its importance in investors’ portfolios worldwide."

Luca also pointed out that the Fed’s newly announced short-term Treasury purchase program represents a direct support factor for gold:

"The return of quantitative easing increases market liquidity and lowers the opportunity cost of holding the precious metal, making gold more attractive to investors seeking capital safety."

He added:  "The Fed’s latest move also signals greater flexibility in monetary policy, which boosts investor confidence in gold as an asset that preserves value over the medium and long term."

Impact of the Fed Decision on Gold and Markets

In its latest meeting, the U.S. Federal Reserve lowered interest rates by 25 basis points to a range of 3.50% – 3.75%, a move that was fully priced into markets. The decision came after a 9-to-3 vote, with member Stephen Miran advocating for a larger 50-point cut, while Goolsby and Schmid preferred to keep rates unchanged, marking the Fed’s largest split since 1988.

Luca explained: "Such a division reflects hesitation about the pace of the economy, which in turn increases gold’s importance as a stable asset amid an unpredictable economic environment."

Monetary Policy Flexibility and Gold Support

The Fed’s statement revised forward guidance language from “considering additional adjustments” to “considering the extent and timing of additional adjustments”, reflecting greater flexibility in responding to economic data.

Luca commented: "This flexibility strengthens gold’s position as a safe choice, as markets expect the Fed to react quickly to any surprise economic data, increasing dollar volatility and supporting gold prices."

Labor Market and Inflation: Additional Gold Drivers

The updated economic projections (SEP) showed relative stability in the interest rate path, with divisions among members about future direction.

Luca noted: "Slower job growth and a slight rise in unemployment, along with slightly lower core inflation expectations, create an ideal environment for gold to serve as a safe haven, as demand rises amid declining confidence in other assets."

Quantitative Easing: A Strong Boost for Gold

The Fed announced a new short-term Treasury purchase program totaling $40 billion per month to maintain liquidity levels, with guidance to gradually adjust purchases in the coming months.

Luca said:"This program provides direct support for gold, as it increases liquidity and lowers the opportunity cost, stimulating global demand for the precious metal. Investors will see gold as the foremost shield against market volatility and flexible monetary policies."

He added:"With the continued weakness of the U.S. dollar and falling real yields, gold is expected to benefit even more, potentially reaching record levels not seen in decades."

Gold Leading the Scene in 2026

Luca emphasized that upcoming economic data, including inflation and jobs reports, will be critical in shaping gold’s path in 2026. He added: "Gold’s appeal will extend beyond traditional investors, attracting hedge funds and institutional investors seeking a safe haven, placing the precious metal at the center of global economic events next year."