Gold Could Surge 40% to $5,000 if Fed Cuts Rates Rapidly

In response to the latest Federal Open Market Committee (FOMC) minutes and critical inflationary warnings from Federal Reserve official Austan Goolsbee Musalem, macro-focused analysts are recalibrating their expectations, and so is the market. Among them, TKL, who accurately predicted Bitcoin’s recent peak, has now released a bold projection: gold could soar above $5,000 if the U.S. central bank follows a rapid rate-cutting path under economic and political pressure.

The minutes from the Fed’s June meeting, released recently, hinted at optimism regarding tariffs. However, the document did not account for recent geopolitical escalations, including the global trade letters dispatched by the U.S. administration. If no new agreements are struck, steep tariffs could take effect on August 1, raising effective trade duties on imports significantly. As of now, the effective tariff rate stands at 15%, a sixfold increase since the beginning of the year. According to Musalem’s remarks, inflation remains manageable for now, but risks are clearly tilted to the upside due to new trade pressures. He noted that the economy is near full employment, tariffs may increase inflation, but the scale and permanence are still uncertain. High profit margins allow some absorption of tariff impacts, and the real effects may become visible by late 2025 or early 2026. Musalem also emphasized the importance of keeping long-term inflation expectations anchored, implying the Fed may need to hold rates higher for longer, which contradicts market hopes for rapid cuts.

While the Fed appears cautious, TKL is preparing for a possible policy shift. If rate cuts accelerate—especially in response to political pressure and slowing global demand—TKL forecasts a major surge in gold prices. According to their updated model, a 300 basis point rate cut could fuel a scenario similar to the 2021–2024 cycle, where inflation surged and the U.S. dollar weakened. This time, TKL sees gold breaking above $5,000, representing a potential 40% gain over 12 months and up to 80% over five years. Such a move would reflect both monetary expansion and renewed investor demand for hard assets as a hedge against fiscal and geopolitical instability.

TKL’s broader asset outlook also includes an SPX target of 7,000 and a stabilized oil price at $80 under similar macro conditions. These targets underline a belief that easing policy will bolster risk assets while pressuring the dollar. As the Fed, trade tensions, and inflation dynamics remain in flux, gold’s trajectory could become a defining macro story of the next 12 months.