Steve Grasso: Fed Opening Doors to Rate Cuts Will Bring Gold Higher but May Take Time

Why It Matters

Investors should watch Fed signaling and real-yield moves as the primary drivers for gold’s next leg up, while central-bank flows and geopolitics remain key risk factors. Oil’s demand-hit dynamics imply downside risk to prices and to inflation expectations if supply shocks subside, affecting markets and policy choices.

Summary

Gold’s rally depends on Federal Reserve action, not just inflation or geopolitics, says Steve Grasso; if the Fed signals an opening to rate cuts and real yields move lower, gold should run higher, but the process could take time. Today’s weakness in gold reflects still-elevated real yields, rising M2, central-bank and country flows (eg. Turkey selling), and easing geopolitical pressure that reduces safe-haven demand. Grasso also highlights that sanctioned nations can move gold when other assets are restricted, supporting its appeal as an alternative reserve. On oil, he notes extreme backwardation and expects demand destruction of roughly 4 million barrels a day could push prices below pre-war levels — potentially under $65/barrel — once disruptions resolve.

Original Description

Steve Grasso, Grasso Global CEO, joins 'Power Lunch' to discuss Grasso's thoughts on gold prices, the narrative around the metal and much more.