Gold Soars, Mortgages Dip as Fed Easing Looms

The head of Crypto.com, Kris Marszalek, has signaled optimism about a potential surge in the cryptocurrency market, citing the likelihood of a U.S. Federal Reserve rate cut as a key catalyst. The prediction aligns with broader market expectations for monetary easing, as financial institutions and analysts have increasingly pointed to a dovish shift in the Fed’s policy trajectory. According to recent projections from Morgan Stanley, a 25-basis-point rate cut at the upcoming September meeting is expected, with similar reductions likely at each of the following meetings through December 2026 [1]. This anticipated easing of monetary policy has already begun to impact financial markets, with mortgage rates showing a downward trend as of late August, driven by heightened speculation about the Fed’s next move [2].

The Federal Reserve’s cautious approach was underscored by Chair Jerome Powell during a speech at the Jackson Hole symposium on August 22, where he emphasized the evolving risk balance in the labor market and hinted at the potential for policy adjustment. Powell noted that the slowing pace of job creation, combined with stable unemployment figures, suggests increasing downside risks to employment. These remarks were interpreted by many as a strong signal that the Fed might reduce interest rates at its next meeting [2]. The CME FedWatch tool, a widely used indicator of market expectations, reflected this sentiment, with the probability of a September rate cut rising from 75% to 87% in the week following Powell’s speech [2].

The broader financial markets have already begun to react to the expectation of lower rates, with gold prices reaching record highs amid heightened demand from investors and central banks. Analysts at ActivTrades and Julius Baer have attributed this rally to the weakening U.S. dollar, geopolitical uncertainties, and concerns over the Fed’s independence following political tensions involving Donald Trump and Federal Reserve Governor Lisa Cook. Gold prices have surged more than 34% in 2025, with forecasts suggesting the possibility of reaching $4,000 per ounce in 2026 if global economic and geopolitical conditions remain volatile [3]. Central banks, particularly in developing economies, have also been major buyers of gold, with China’s central bank adding to its reserves for the ninth consecutive month [3].

The anticipated rate cuts are also expected to influence mortgage rates, with the 30-year fixed-rate mortgage averaging 6.59% as of late August, reflecting a 28-basis-point decline from earlier in the summer [2]. While the Fed’s decision in September will provide further clarity, the Summary of Economic Projections (SEP) due at the end of the meeting could affect market expectations for future rate cuts in October and December. Analysts suggest that any additional cuts would likely drive mortgage rates even lower, reinforcing the broader trend of declining borrowing costs [2].

Investors across various asset classes are closely watching the Fed’s next steps, with the outcome of the September meeting and subsequent data releases, such as the Personal Consumption Expenditures index and the Consumer Price Index, expected to shape the trajectory of monetary policy. The central bank’s approach will be critical in determining the extent of economic support provided through rate reductions, which could have wide-ranging implications for financial markets, including cryptocurrencies, where lower interest rates often correlate with increased risk-taking and speculative investment [1].

Source:

[1] This Wall Street heavyweight predicts interest rates could go even lower than markets think (https://www.marketwatch.com/story/this-wall-st-heavyweight-predicts-interest-rates-could-go-even-lower-than-markets-think-879a4748)

[2] Mortgage Rates Fall on Fed Cut Speculation (https://www.floridarealtors.org/news-media/news-articles/2025/09/mortgage-rates-fall-fed-cut-speculation)

[3] Looming Fed rate cuts fuel gold price bonanza to records (https://finance.yahoo.com/news/looming-fed-rate-cuts-fuel-162425170.html)