The US Treasury Secretary made a rare call to cut interest rates by 150 basis points, and gold rose in response, putting pressure on the US dollar index

The Zhitong Finance App learned that after US Treasury Secretary Bezent urged the Federal Reserve to reduce borrowing costs, traders raised their bets on the Fed's interest rate cut, and the price of gold rose as a result. As of press release, the price of gold futures rose 0.16% to 3413.62 US dollars/ounce; the US dollar index fell 0.11% to 97.73.

Bezent made the clearest appeal so far for the Federal Reserve to begin a cycle of interest rate cuts. He believes the federal funds rate should be at least 1.5 percentage points lower than the current level. “I think we may face a series of interest rate cuts, starting with a 50 basis point cut in September,” Bezent said on Wednesday. Whichever model you refer to, it indicates that our interest rate should probably be reduced by 150 to 175 basis points.”

The Federal Reserve kept the benchmark interest rate in the target range of 4.25% to 4.5% at a recent policy meeting. Bessent reiterated that he believes that if officials knew the revised labor market data released two days after that meeting, they might have cut interest rates. He was referring to data released by the US Bureau of Labor Statistics on August 1, which lowered the number of new non-farm payrolls by 258,000 in May and June. The same is likely to be the case for the June meeting, he said. “I'm guessing we could have cut interest rates in June and July,” Bezent said.

It is worth noting that the US Treasury Secretary usually does not express a specific opinion on the Federal Reserve's interest rate, and Bessent himself said over the past few months that he will only discuss the Fed's past policy decisions, not future decisions.

Bezent's remarks have fueled speculation that the Federal Reserve will be in September. Some investors are betting that the Federal Reserve will cut interest rates sharply next month. Gold generally benefits in a low interest rate environment because it does not generate interest on its own. Meanwhile, according to a government official, the Trump administration is considering several private-sector individuals to chair the Federal Reserve. Candidates include a strategist from Jeffrey and a BlackRock executive.

Ole Hansen, head of commodity strategy at Saxo Bank, said: “As the risk of stagflation rises, and someone who advocates cutting interest rates sooner or later becomes the chairman of the Federal Reserve, the trend of gold will increase.” The data shows that since this year, the price of gold has risen by about 28%, with most of the increase concentrated in the first four months. The rise in gold prices is due to safe-haven demand brought about by heightened geopolitical and trade tension, as well as large-scale purchases by central banks.

Furthermore, traders are still awaiting clarification on whether gold bar imports will be subject to tariffs. The US Customs and Border Protection announced last week that it would levy tariffs on imported gold bars. This shocked the market and drove the premium of New York gold futures prices compared to London's spot prices to soar. On Monday, Trump said he would not levy tariffs, but gave no further explanation.