Gold Eyes $3,700: Could the Fed Deliver a Bigger Surprise?
Monday, September 22nd 2025
Gold continues to trade near record highs, hovering just below $3,700 per ounce, as investors prepare for the Federal Reserve’s next move. While markets widely expect an interest rate cut, some analysts argue that policymakers may take a bolder step than most anticipate.
Fed Policy: More Aggressive Than Expected?
Robert Minter, Director of ETF Strategy at abrdn, told that gold is already on pace to hit his year-end target of $3,700, but momentum could accelerate if the Fed shocks markets with a 50-basis-point rate cut.
Currently, the CME FedWatch Tool gives such a move less than a 5% probability, but Minter stressed that the idea wasn’t even on the table just weeks ago. “The Fed has the excuse of new data to justify acting decisively,” he explained.
Recession Risks Fuel Uncertainty
Concerns over a potential recession are deepening. Minter pointed to President Donald Trump’s growing criticism of the Fed, arguing that the central bank risks being seen as slow and reactive.
He likened Powell’s policy approach to “driving a car by looking through the rearview mirror,” relying on outdated data rather than forward-looking indicators.
Adding to the pressure, the Bureau of Labor Statistics recently revised employment numbers, cutting nearly one million jobs from the record — the sharpest downward revision in U.S. history and three times the 10-year average. Combined with weaker job growth and rising unemployment claims, these revisions give the Fed cover to act more decisively.
Why a 50-Point Cut Isn’t Impossible
Traditionally, a half-point cut is seen as a panic move. But Minter argued that the Fed could frame it as a proactive step to get ahead of recession threats.
Even if the central bank sticks to a smaller reduction, he said the messaging will be just as critical. A signal of a multi-year easing cycle lasting through 2026 could provide the same bullish momentum for gold, potentially driving prices beyond his $3,700 target.
“There is no question that rates have to come down,” Minter said. “Two-year yields show the Fed funds rate is already about 100 basis points too high.”
Silver Poised to Ride Gold’s Coattails
Minter also remains bullish on silver, noting its dual role as both a safe-haven and an industrial metal.
“I like silver because I like emerging market growth prospects and growing capex spending,” he said. “Emerging markets are investing in energy independence and security, and that will continue to drive demand for silver.”
Outlook: Policy Meets Precious Metals
Whether the Fed opts for a cautious cut or a bold half-point move, the message is clear: the easing cycle is here, and gold is set to benefit. With silver positioned to follow on industrial demand, both metals look ready to extend their rallies into year-end.
