Gold is having its strongest year since 1979. The big question now: what happens after the Fed’s recent rate cuts?
History offers a useful framework:
If a recession follows within 12 months, gold has meaningfully outperformed.
If the economy avoids recession, gold has usually underperformed, as investors rotate back into risk assets supported by easier monetary policy.
This dynamic reflects gold’s role as a safe haven asset. When economic conditions weaken, uncertainty rises, earnings come under pressure, and risk aversion grows—driving flows into gold. But in the absence of that weakness, easing policy tends to lift equities and other risk assets instead.
The takeaway: For gold bulls, the outlook depends less on rate cuts themselves—and more on whether economic weakness is around the corner.
