Greenlight Capital’s David Einhorn expects the Federal Reserve to cut interest rates more than expected this year, giving him more confidence in betting on gold.
Expectations for a rate cut eased slightly on Wednesday after January’s much better-than-expected jobs report, but traders are still pricing in a more than 88% chance that the central bank will cut rates by two-quarters of a percentage point by the end of the year, according to the CME FedWatch tool.
But Einhorn said it was “wrong” for the market to view the latest jobs report as a reason not to make cuts. In fact, he believes the rate cut number could be higher than that, as he expects Kevin Warsh, whom President Donald Trump nominated to replace Jerome Powell as Fed chair, will be able to persuade the committee to cut rates.
“Certainly he won’t be able to convince people if inflation is 4% or 5%, but if it’s not, he’ll argue for productivity,” Einhorn told Sarah Eisen on CNBC’s “Money Movers” on Wednesday, adding that Warsh’s view is that he would take a position on lowering rates “even if the economy is overheating.”
“By the end of the year there will be more than two major cuts,” he continued.
The hedge fund manager also owns gold, which he sold late last month as concerns on Wall Street eased over the Fed’s independence after President Trump nominated Warsh to be Fed chairman.
The yellow metal, typically seen as an inflation hedge, has since shown some recovery, with gold futures up more than 17% this year. That comes after it soared more than 60% in 2025 on the back of threats to central bank independence, rising geopolitical tensions and unstable trade policy. Since 2024, it has skyrocketed by more than 120%.
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Gold futures prices from 2024 onwards
Einhorn, who made his name betting against Lehman Brothers at the Son Investment Conference months before Sun Investment Bank declared bankruptcy in 2008, noted that gold has actually risen over the past few years as a result of it “becoming a reserve asset” held among central banks around the world.
“The U.S. trade policy is so volatile that other countries insist on settling their trade in currencies other than the U.S. dollar,” he said.
He said the reason for holding gold in the long run is that the current relationship between fiscal and monetary policy “doesn’t make sense.” He also said other major developed currencies around the world are “on par or worse” than the US.
The dollar suffered its biggest single-day decline since April 2025 after President Trump said last month that he was not concerned about the recent weakness in the dollar.
“There are several issues that could impact some major currencies in the coming years,” he said.
Einhorn said he considered betting on further rate cuts “one of the best trades right now,” and said he was also long SOFR (secured overnight financing rate) futures, essentially a bet that short-term interest rates would continue to fall.
