The US Treasury Secretary issued a rare call for a 150 basis point rate cut, causing gold to rise in response, while the US dollar index is under pressure.

After US Treasury Secretary Besent urged the Federal Reserve to lower borrowing costs, traders increased their bets on rate cuts from the Federal Reserve, causing gold prices to rise. As of the time of publication, gold futures prices rose by 0.16% to $3413.62 per ounce; the US dollar index fell by 0.11% to 97.73. Besent made the most explicit call yet for the Federal Reserve to start a rate cut cycle. He believes that the federal funds rate should be lowered by at least 1.5 percentage points from the current level. Besent stated on Wednesday, "I think we could see a series of rate cuts, starting with a 50 basis point cut in September. Regardless of which model you refer to, it indicates that our rates may need to be lowered by 150 to 175 basis points." At its recent policy meeting, the Federal Reserve kept the benchmark interest rate within the target range of 4.25% to 4.5%. Besent reiterated that he believes that if officials had known about the revised labor market data released two days after that meeting, they might have already cut rates. He was referring to data released by the US Bureau of Labor Statistics on August 1, which revised down nonfarm payroll job gains for May and June by 258,000. He said the June meeting might have been different as well. Besent added, "I suspect we could have cut rates in June and July." It is worth noting that US Treasury Secretaries typically do not comment specifically on the Federal Reserve's interest rates, and Besent himself has stated in recent months that he only discusses past policy decisions by the Federal Reserve and does not talk about future decisions. Besent's remarks have intensified speculation about what the Federal Reserve will do in September. Some investors are betting that the Federal Reserve will make significant rate cuts next month. Gold typically benefits in a low-interest rate environment because it does not generate interest. Meanwhile, a government official revealed that the Trump administration is considering several private sector individuals to serve as Federal Reserve Chairman, including a strategist from J.P. Morgan and an executive from BlackRock. Ole Hansen, head of commodity strategy at Saxo Bank, stated, "With the rise in stagflation risks and someone advocating rate cuts sooner or later becoming the Federal Reserve Chairman, gold's trend will be higher." Data shows that gold prices have risen by about 28% so far this year, with most of the gains concentrated in the first four months. The rise in gold prices has been driven by geopolitical tensions and trade tensions, as well as large-scale gold purchases by central banks. Furthermore, traders are still awaiting clarification on whether tariffs will be imposed on imported gold bars. The US Customs and Border Protection announced last week that gold bar imports would be subjected to tariffs, shocking the market and causing the premium of New York gold futures prices to soar relative to London spot prices. On Monday, Trump stated that he would not impose tariffs, but did not provide further details.