Lower interest rates and the beginning of a rate cut cycle create a favorable environment for gold, as it becomes more attractive compared to yield-bearing assets.

“the cheaper the cost of money it's better for gold”

Tom Ellsworth suggests that the Federal Reserve needs to consider the economic reality of labor market fragility and move toward interest rate cuts.

“I happen to be right there with Michelle Bowman. And I think she's had the guts to stand up. First time in 32 years we had two governors actually stand up in disscent.”

He suggests that interest rates should be kept moderate and low to foster economic growth and business stability.

“the Republicans are always going to want to keep rates low because cheap rates mean growth people borrow money cheap they do more they buy more you make more and you know people spend more people are working and uh it just seem like a much better world to me when interest rates are lower”

Lowering interest rates is beneficial for the economy as it allows more people to borrow money, build businesses, and buy homes.

“So again, just lowering the rates, getting the government a little bit out of the way so people can borrow more and partake in the economy more is generally good.”

A 25 basis point reduction in the policy rate may be appropriate at the March meeting if the January labor market data is revised or weakens.

“If the good labor market of January is revised or evaporates in February, it was support my decision at the FOMC's last few that a 25 basis point reduction in the policy rate was appropriate, and that such a cut should be made at the March meeting.”

He believes the Federal Reserve should not cut interest rates because inflation is not yet controlled and current liquidity is sufficient for businesses.

“In fact, I'm I'm highly skeptical the Fed is going to cut rates given the current state of the economy. Because inflation has not been put to bed. Because liquidity actually is not all that hard to get for businesses right now.”

The Federal Reserve is constrained because it cannot cut rates due to inflation risk and cannot raise rates due to the risk of hurting economic growth.

“And to some degree, that ends up handcuffing what the Fed's able to do. They can't cut rates because that's going to lead to more inflation. But at the same point in time, they can't raise rates because that would lower economic growth.”

Tony Zhang expects rate cuts to be delayed to December due to inflationary pressures and the Federal Reserve's hawkish stance.

“So if you look at the 10-year yields, we're back above 4.3%. This is a pretty substantial change from where we were hoping to be even just a few weeks ago, where we were expecting the first rate cut to happen in June. Now that's being pushed out to December.”