Greenlight Capital’s David Einhorn expects the Federal Reserve to cut more interest rates than expected this year, and that gives him greater confidence in his gold bet.
Although expectations for a rate cut eased slightly on Wednesday after January’s much better-than-expected jobs report, traders are still currently pricing in a greater than 88% chance that the central bank will cut two quarter percentage points 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 job numbers as a reason not to make cuts. In fact, he thinks the number of rate cuts could be higher because he believes Kevin Warsh – President Donald Trump’s nominee to replace Jerome Powell as Fed Chair – can convince the committee to do so.
“If we have 4% or 5% inflation, he’s certainly not going to be able to convince people, but otherwise he’s going to be pro-productivity,” Einhorn told Sara Eisen on CNBC’s “Money Movers” on Wednesday, adding that he believes Warsh will support the cuts position “even when the economy is running hot.”
“I think by the end of the year it will be significantly more than two cuts,” he continued.
The hedge fund manager also owns gold, which sold off late last month after Trump announced Warsh as his nominee for Fed chair, as the move eased Wall Street fears about the Fed’s independence.
The yellow metal – usually seen as an inflation hedge – has since seen some recovery, with gold futures up more than 17% this year. This comes after it rose more than 60% in 2025 amid threats to central bank independence as well as rising geopolitical tensions and unstable trade policies. It has increased by more than 120% since 2024.
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Gold futures prices since 2024
Einhorn – who rose to fame in 2008 when he bet against Lehman Brothers at the Sohn Investment Conference just months before the investment bank’s bankruptcy – pointed out that gold has actually risen in recent years because it has become “the reserve asset” of central banks around the world.
“US trade policy is very unstable and leads to other countries saying we want to do our trade in something other than US dollars,” he said.
In the long term, one reason to own gold is the fact that the current relationship between our fiscal and monetary policies “doesn’t make sense,” he said. He also said that other major developed currencies around the world were “as bad or worse” than the US
The US dollars suffered its biggest daily decline since April 2025 last month after Trump said he was not concerned about the currency’s recent weakness.
“There are some issues that could arise with some of the major currencies at some point in the next few years,” he said.
Einhorn called betting on further rate cuts “one of the best trades out there right now” and said he also placed long SOFR (Secured Overnight Financing Rate) futures, which is essentially a bet that short-term interest rates will continue to fall.