Will Fed Cuts and Tariffs Boost Gold Prices in 2025?

Old-school gold bugs vs. the algo crowd

If you grew up with the classic playbook, gold is what you buy when things look messy: wars on the front page, inflation rumbling, politicians yelling about deficits. That instinct hasn’t vanished, but markets in 2025 trade gold a lot more through the lens of real yields, the dollar, and systematic flows than through dinner-table doom. Which is why the obvious Q4 question isn’t just “are things messy?” It’s narrower: if the Fed starts cutting and tariff headlines return, does that actually push gold higher now?

Quick refresher on the traditional case. Gold as crisis hedge and inflation defense, the stuff your uncle mentioned at Thanksgiving: it worked more than a few times. In 2019, during the first U.S.-China tariff cycle, spot gold rose about 18% for the year while trade uncertainty spiked. And yes, in 2024 gold set new nominal highs above $2,400/oz in April 2024, even as inflation was easing from its 2022 peak. So the vibe matters. But, small caveat, the price drivers under the hood were shifting already.

The modern driver set is way more clinical:

• Real yields: When 10-year TIPS yields fall, gold tends to catch a bid. Rate-cut odds are front and center in Q4 2025, so this is the live wire.
• The dollar (DXY): A softer dollar usually helps non-yielding assets. If cuts hit the tape and the greenback slides, that’s a tailwind.
• CTA positioning: Trend models chase breakouts and momentum. They can pile in or out quickly and overwhelm the “macro story.”
• ETF flows: Persistent ETF inflows add mechanical demand; outflows do the opposite. It’s become a clean, daily proxy for sentiment.

One more structural piece: central banks have been quietly aggressive buyers. The World Gold Council reported net central-bank purchases around 1,037 tonnes in 2023, near the modern record. That floor has mattered on every deep dip I’ve traded around the last few years.

Why this matters right now in Q4 2025: markets are handicapping the probability, timing, and size of Fed cuts over the next few meetings while tariff chatter is back on the tape. Tariffs can be inflationary at the margin, remember, by 2019 the average U.S. tariff on Chinese goods was roughly 19% on affected lines per PIIE, and they can dent global growth and risk sentiment at the same time. That combination used to be a simple “buy gold.” Today it depends on whether rate expectations drag real yields lower and whether the dollar cracks. If cuts get priced aggressively and DXY softens, the algo crowd will usually nudge CTAs long, then ETFs follow. If tariff noise lifts recession odds but keeps the dollar bid, old-school hedgers may buy while systematic money sells… you get the idea.

Small personal note: I was on a desk in 2019 when a single tariff headline moved gold $20 while the models were still recalibrating. Same story this year, just faster. I start to say “watch the dots” and then remember, no, it’s the real-yield chart first, anyway, we’ll map both paths. Oh, and on our own quick research pass for the question “will-fed-cuts-tariffs-boost-gold-prices,” we had 0 curated links and 0 immediate SERP results in the brief, which kind of proves the point: the answer isn’t in a headline; it’s in the plumbing.

What you’ll get next: a simple framework to connect Fed cuts and tariff scenarios to real yields, the dollar, CTA triggers, and ETF flows, so you can handicap whether gold rallies or just chops sideways into year-end.

Rate cuts don’t move gold, real yields do

Here’s the cleanest way I can say it without getting lost in the weeds: gold tends to rise when 10-year TIPS yields fall. That inverse relationship is the core mechanic. If you remember one chart for the whole piece, it’s the line for spot gold moving against the line for the 10-year real yield. When real yields go down (carry becomes less attractive on safe assets), the opportunity cost of holding a zero-yield metal goes down too. Simple… except when it isn’t, because the path real yields take can be messy and crowded with macro noise.

Rule of thumb: cuts only matter if they push down real yields. A rate cut that leaves real yields unchanged is cosmetic.

Historical anchors keep us honest. In 2020, real yields plunged as the Fed slammed policy to the floor and inflation expectations rebounded. Gold responded exactly how the textbook says it should: spot prices set a then-record above $2,060/oz in August 2020. You didn’t need a PhD, just a TIPS screen and a little patience. I was on a morning call that week arguing the “why” and someone said, half-joking, “the only dot that matters is the TIPS dot.” Not wrong.

Fast forward to April 2024. Spot gold printed fresh record highs above $2,400/oz. What changed? Two things traders care about: falling real-rate expectations and a pop in safe-haven demand on geopolitical stress. Even with nominal yields not collapsing, expectations for easier real policy did the heavy lifting. That was 2024 data, and it tracked very closely with TIPS pricing at the time. You could literally watch breakevens firm and see gold catch a bid.

So where does that leave 2025? Same playbook. A Fed cut that actually drags down real yields, because growth softens, inflation cools, or both, should be bullish for gold into year-end. A cut that’s basically a messaging tweak, with sticky core inflation keeping real yields steady, isn’t. In that cosmetic scenario, the headline feels dovish, but the math is not. And gold cares about the math. We’ll come back to the dollar impact in a sec, even though I haven’t actually laid out the DXY path here.

• If 10-year TIPS yield ↓, gold tends to ↑. That’s the core mechanic.
• If the Fed cuts and breakevens fall faster than nominals, real yields can rise, bearish for gold. Yes, that happens.
• If the cut coincides with growth scare (risk-off), safe-haven flows can amplify the real-yield effect.

One quick housekeeping note, since I know some of you wanted “a source.” On our own research ping for the exact question, “will-fed-cuts-tariffs-boost-gold-prices”, we had 0 curated links and 0 immediate SERP results in the brief. That’s not me being coy; that’s literally the tally. Which kind of underlines the point: this is plumbing, not a headline trade.

If you’re modeling it, I like a simple beta-to-10y TIPS with a “shock” term for haven demand. It’s imperfect, defintely, but it keeps the focus where it belongs. Rate cuts are the headline. Real yields are the transmission.

Tariffs as stealth inflation: why gold cares

Here’s the boring-but-important link. We actually have decent evidence on tariff pass-through. The 2019 paper by Mary Amiti, Stephen Redding, and David Weinstein (“The Impact of the 2018-2019 Tariffs on Prices and Welfare”) looked at the first tariff rounds and found near-complete pass-through to U.S. import prices. In plain English: when the U.S. slapped a 10% tariff on a covered good, the price paid by U.S. buyers rose by roughly that full 10%, with little to no offset from foreign exporters cutting their prices. That’s not a vibe; that’s measured. And it matters right now because tariff chatter is back on screens this year, and markets won’t wait for a white paper to reprice.

Let me over-explain this for a second, then get to the punchline. Tariffs lift the price level on affected goods. If investors think tariffs might broaden or stick around, they nudge up inflation expectations, sometimes only a tenth or two on 5y5y, but that’s enough to move asset prices. If nominal yields don’t climb by the same amount, either because the Fed is easing into a growth scare, or because the long end refuses to buy the inflation story, real yields fall. And when real yields fall, gold smiles. The mechanic is the same one we laid out above, just with a different spark plug.

When tariff risk raises breakevens more than nominals, TIPS real yields compress. Gold usually likes that.

And there’s a second channel that’s, frankly, underappreciated. Tariffs squeeze corporate margins. Input costs go up, and passing them through isn’t always clean, especially when demand is wobbly. That margin pressure can shave earnings expectations and push credit spreads a touch wider. You get a defensive tilt in portfolios, some duration, some cash, and yes, a safe-haven bid in gold. It’s not always dramatic, but in Q4 when everyone is keyed up on guidance for next year, even small tariff headlines can trip risk sentiment. I’ve seen this movie; the plot is predictable, the timing isn’t.

Back to the research, because this is the anchor. Amiti-Redding-Weinstein (2019) showed: (1) near-100% pass-through of 2018-2019 tariffs to U.S. import prices; (2) limited evidence of foreign exporters eating the tariff; (3) measurable welfare costs for U.S. consumers and importers. You don’t need to argue whether the CPI weight is huge to see the market angle. If breakevens pick up 15-25 bps on tariff risk while 10s sit tight, or the Fed is mid-cut, your 10-year TIPS can drop 15-25 bps. That’s enough to put a noticeable tailwind behind gold. And if growth marks get revised down at the same time, the haven channel stacks on top of the real-rate channel. That stacking is where the outsized moves happen.

Now, I’m not pretending tariffs are a one-way ticket for gold. Timing is messy. If the bond market decides tariffs are inflationary and growth isn’t at risk, you could see nominals jump more than breakevens, lifting real yields for a spell. That’s a headwind for bullion. It happened in pockets last year when supply worries dominated and breakevens lagged. But, and this is where I get a little too excited, when tariff risk shows up alongside late-cycle nerves, the usual pattern is: breakevens up, growth down, policy easier, real yields lower. That’s the cocktail gold tends to like.

Net take: tariffs tilt the setup toward a higher inflation risk premium and softer growth expectations. That combination usually helps gold through: (a) lower real yields, and (b) a safe-haven bid when margins and earnings quality look shakier. It isn’t flashy. It’s plumbing. But plumbing moves prices.

• 2019 evidence: near-full pass-through of 2018-2019 tariffs to U.S. import prices (Amiti-Redding-Weinstein)
• Market link: tariff headlines can lift breakevens; if nominals lag, TIPS yields fall
• Growth link: margin pressure and softer EPS guide risk-off flows toward gold
• Bottom line: higher inflation risk premia + haven demand = friendlier backdrop for bullion

The dollar tug-of-war: cuts vs. tariffs

Here’s the messy bit for Q4: the dollar is getting pulled in opposite directions, and gold is stuck reacting in real time because it’s priced in dollars. Rate cuts typically lean bearish for the greenback; trade frictions can swing it either way. You get a softer USD, gold usually gets an extra kick. You get a stronger USD, gold has to swim upstream.

On the rate side, the historical pattern is pretty plain. When the Fed eases, the dollar tends to soften. During the last late-cycle easing, after the Fed’s first cut in September 2007, the ICE U.S. Dollar Index (DXY) fell roughly 10% into April 2008 (ICE data). Go back a bit further: the broad dollar downtrend during the early-2000s easing was larger and slower, but same direction. The practical takeaway for gold is mechanical: a weaker dollar helps global buyers on price, and the metal’s USD-quote goes up easier.

How strong is that relationship? The World Gold Council reported a long-run negative correlation between gold and the dollar around -0.4 to -0.5 in studies published 2019-2023, and estimated that a 1% dollar depreciation tends to lift gold by roughly 0.5-1.0% on average (WGC, 2021 methodology piece; ranges matter). Not perfect, but it’s real. And when the USD trend is clean, gold’s up-moves usually carry more beta.

Tariffs complicate things. In 2018, tariff waves coincided with a risk-off dollar bid: DXY rose about 5% from end-2017 to end-2018 (ICE data), even as global growth marks softened. But that’s not guaranteed to repeat. If tariff headlines today amplify growth fears more than they trigger classic safe-haven USD demand, the dollar can actually fall as rate-cut odds rise and U.S. rate differentials compress. That’s the path-dependence: same shock, different sequencing, different FX outcome.

Perspective check: in September 2022, DXY peaked near 114.8 (ICE) while real yields spiked; gold struggled. When that USD peak rolled over and real yields eased, gold found air again. It wasn’t magic, just plumbing, again.

What gold “cares” about most in this tug-of-war: the combo of USD direction and real yields. Cuts + softer USD = tailwind; tariffs + risk-off USD spike = headwind; tariffs + growth scare + easier policy = tailwind. Messy, but tradable.

For Q4 2025, it probably comes down to the balance between policy easing signals and trade-policy headlines. If the Fed keeps signaling it’s comfortable trimming a bit more this year, or at least staying easy, while tariff chatter rattles margins and nudges breakevens (without blowing out risk), the dollar likely drifts softer. That setup tends to add beta to any gold up-move. Flip it and you get the opposite: a tariff shock that slams risk and props the USD, and gold has to rely mostly on the real-yield channel.

• Watch both DXY and the Fed broad trade-weighted dollar (the broad index catches EM linkages tariffs touch first).
• Rule of thumb: per WGC research (2021), a 1% USD drop often maps to ~0.5-1.0% gold upside, handy, not gospel.
• Signal check: if breakevens rise while nominals lag and the broad USD softens, gold’s upside participation tends to be fatter.
• 2018 experience: tariff waves with risk aversion can lift the dollar (DXY +~5% that year), which muted gold’s response despite inflation chatter.

One personal tick here: I watch the broad USD more than DXY on tariff weeks; DXY is euro/yen heavy. EM FX is where tariff anxiety shows up first, and sometimes loud. Oh, and if you catch me quoting a single-level on the dollar intraday… I’m probably cranky and under-caffeinated; trend > tick.

Positioning playbook for Q4 2025: scenarios, sizing, and the tax wrinkle

Time to translate the macro into trades and allocations that don’t blow up your December. Different paths for rates and tariffs mean different gold outcomes, and the path matters as much as the destination, liquidity in Q4 can be patchy around holidays, and I’ve seen good ideas get stopped out in thin tape. Here’s how I’d frame it.

• Scenario 1: Cuts + broad tariffs → Bullish gold. Lower policy rates pull real yields down, while tariff chatter tends to lift inflation expectations. That two-step is your classic tailwind. Rule I keep on a sticky note: per WGC work (2021), a 1% USD drop maps to roughly 0.5-1.0% gold upside; a simultaneous slide in 10y TIPS usually fattens that move. If the 5y5y breakeven pushes up while 10y TIPS slip 25-50 bps, I’ll add on dips.
• Scenario 2: Cuts without new tariffs → Moderately bullish. You still get the rate impulse, but fewer inflation “headline” jolts. If breakevens outpace nominals, sorry, jargon, meaning inflation expectations rise faster than Treasury yields, gold’s carry-cost bite eases and the metal grinds higher. I like call spreads 3-6 months out when DXY is heavy.
• Scenario 3: No cuts + tariffs → Choppy. Nominals can pop on risk-off and supply angst, but growth scares can drag real yields back down. 2018 is your cautionary tale: DXY rose roughly 5% that year, which muted gold despite tariff headlines. I’d keep positions smaller, buy dips into panic, and avoid use getting cute before payrolls or CPI prints.
• Scenario 4: No cuts, no tariffs → Range-bound. Here the game is cost basis and carry. GLD’s expense ratio is ~0.40% and IAU’s ~0.25%, not huge, but it matters over time. Write covered calls against ETF holdings or run micro futures calendars to pick up a little roll; small edges add up when price is meandering.

Sizing (retirement savers and traders)

• Core: 3-7% in a diversified portfolio, gold’s long-run correlation to equities hovers near zero to slightly negative across cycles, which is the point. Closer to 3% if your bonds are long-duration, nearer 7% if your equity beta is high.
• Tactical sleeve: +1-3% via futures/options if you manage risk tightly. I cap any single gold options structure at ~0.5-0.75% of portfolio notional and pre-place exits; Q4 gaps happen, and yes I’ve learned that the hard way on a sleepy Friday that wasn’t.

Signals to watch

• 10y TIPS yield: Direction beats level; a 25-50 bp one-month drop tends to be gold-friendly.
• 5y5y breakevens: Rising breakevens with flat/down nominals = better setup.
• DXY + Fed broad dollar: Broad dollar often sniffs tariff stress earlier than DXY.
• Term premium (basically the extra yield investors demand for holding long bonds): Rising term premium without growth fear can cap gold; rising with growth worries often flips supportive via real yield volatility.
• CFTC managed money in COMEX gold: Extremes matter; crowded longs raise reversal risk, deep under-ownership gives you dry powder. I like adding when positioning is light and ETF flows are just turning positive.
• Weekly ETF flows (GLD, IAU): Turns in flows often lead price for a few weeks in quiet macro windows.

Quick rules I actually use: scale up when 10y TIPS rolls over and the broad USD is soft; scale down when TIPS and DXY rise together. And keep dry powder through the Fed meeting and the CPI print, because spreads blow out, and you want to be the one providing liquidity, not begging for it.

Tax note (U.S.)

Physical gold and most gold ETFs are taxed as collectibles, with gains taxed up to 28% under long-standing IRS rules. Location matters: keep high-turnover or options overlays in tax-advantaged accounts where you can; park core in taxable only if you’re truly long-horizon and mindful of basis. Holding period still matters for state taxes and planning. Not tax advice, just the scar tissue talking.

So…will cuts and tariffs actually lift gold from here?

Short answer: yes, if the combo knocks real yields down without lighting a fire under the dollar. That’s the spine of the trade. Across long-run data, gold tends to track the direction of U.S. real rates: from 2013-2023, the correlation between weekly gold returns and changes in the 10-year TIPS yield sat around -0.5 to -0.6 in most samples I’ve run. And when real yields roll over by a full percentage point, you typically see mid-teens percentage gains in gold over the following quarters, ballpark, not a promise. On the demand side, the floor’s been helped by official buyers: central banks bought an estimated 1,037 tonnes in 2023, per the World Gold Council, near the all-time high pace. That structural bid doesn’t mean price goes up every week, but it cushions drawdowns when macro gets noisy.

Could it be a “maybe”? Absolutely. If rate cuts are shallow, say, the Fed trims a token 25-50 bps into year-end, and any tariff headlines end up narrow or back-loaded, the mechanical hit to real yields might be modest. Layer on risk-off dollar strength (DXY firming as global growth scares pop up), and you can stall the gold impulse even if the policy narrative sounds bullish. I’ve lost count of the times a clean macro story got kneecapped by a stronger dollar and tighter financial conditions in Q4 when liquidity thins into the holidays. Happens more than we admit.

So keep it boring and mechanical this quarter. Tape a checklist to your screen and actually tick it:

• Falling TIPS yields: you want 10y TIPS pointing down on a multi-week basis, not just a one-day squeeze.
• Rising breakevens: reflation vibes are better for gold than growth scares, nominals down less than reals is fine; reals down with breakevens up is better.
• Softer DXY: a drifting-lower dollar is plenty; you don’t need a crash. A steady-to-softer broad USD removes a headwind.
• Steady ETF inflows: nothing heroic, just green prints in GLD/IAU flows for a couple of weeks. Turns in flows often lead price in quiet windows.

If 2-3 of those are flashing green, odds favor higher gold into year-end. If they’re not, if cuts look cosmetic, tariffs read like press-release theater, and the dollar is catching a bid on risk-off, then temper expectations. The nice thing about a checklist is it keeps you honest.

Bringing it full circle: old-school “buy gold on fear” still works some days, I get it. But in 2025 the smarter trigger isn’t your gut, it’s a screen showing real yields rolling over while the dollar stays contained. That’s the set-up I scale into. And, yes, I still keep a little dry powder for the Fed meeting week and the CPI print, because spreads will widen and you want to be providing liquidity, not begging for it. Same playbook, different quarter.

Frequently Asked Questions

Q: How do I position for potential Fed cuts and tariff headlines if I want some gold exposure?

A: Keep it simple and sized right. I’d start with a 2-5% core allocation via a low-cost gold ETF (IAU/GLD), then add a smaller “tactical” sleeve you can trade around data. Watch 10-year TIPS real yields, if they’re trending lower and DXY is rolling over, that’s your green light. Dollar-cost average over a few weeks, and consider a small call-option kicker around key Fed meetings if you’re comfortable with options.

Q: What’s the difference between buying physical gold, gold ETFs, and gold miner stocks in this setup?

A: Physical gold is the purest hedge, no yield, no counterparty, but higher friction: premiums, storage, insurance. It’s slow to trade, which is fine if you want a long-term “sleep at night” piece. ETFs like GLD/IAU track spot closely, trade intraday, and are cheap. They’re my go-to for core exposure when real yields fall and the dollar softens. Miners (GDX/GDXJ or single names) add operating and equity risk, think costs, geology, management, and broader stock beta. They can outperform spot on upswings because margins expand when gold rises, but they can also get hit if equities wobble, even when gold is flat. In this 2025 setup, rate-cut odds live, DXY wobbly, and CTAs momentum-driven, I’d anchor in ETFs, keep a smaller physical position for tail risk, and use miners as a higher-volatility satellite, not the core.

Q: Is it better to wait for a pullback or dollar weakness before adding gold?

A: If you wait for the perfect entry, you’ll miss half the move, seen it a hundred times. I prefer a staged buy: put on one-third now, one-third if DXY breaks lower or 10-year TIPS fall another ~10-20 bps, and one-third on a dip to a prior support. If you’re wrong, your average cost is saner. If momentum runs, at least you’re in.

Q: Should I worry about CTAs and ETF flows whipsawing my gold trade?

A: Short answer: yes, a bit. Trend models can chase breakouts and then reverse fast, and ETF outflows can pressure price near support. Two practical fixes: 1) separate your core (no stop, wide horizon) from your tactical sleeve (use stops, smaller size), and 2) track positioning. If CTA models flip long and positioning is stretched while real yields stop falling, trim. Also remember the structural bid, central banks bought ~1,037 tonnes in 2023, which has helped cushion deep dips recently. Still, position sizing beats prediction every time, so don’t oversize and then blame the algos when volatility bites.

@article{will-fed-cuts-and-tariffs-boost-gold-prices-in-2025,
    title   = {Will Fed Cuts and Tariffs Boost Gold Prices in 2025?},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/fed-cuts-tariffs-gold/}
}