Massive Bet on Rate Cuts and the Next Move for Gold

Gotrade News - Legendary investor David Einhorn predicts aggressive interest rate cuts in the United States. This projection matters heavily because current market pricing expects the exact opposite policy.

According to a CNBC broadcast on Wednesday (11/02), Einhorn claimed markets mispriced the jobs data. Market participants currently expect only two interest rate cuts this year.

Key Takeaways

• The Fed is projected to cut interest rates more than twice this year.

• The new Fed chair will likely use productivity gains to justify rate cuts.

• Gold remains a top hedge amid the ongoing US fiscal policy uncertainty.

Einhorn believes incoming central bank chair Kevin Warsh will bring massive changes. Warsh will likely use rising productivity arguments to justify lowering interest rates.

According to a Seeking Alpha report, Warsh shares similar views with President Donald Trump. Trump openly wants the lowest interest rates globally to boost the economy.

Impact on the Rates Market

This situation led Einhorn to take huge positions in interest rate futures. That move is a direct bet that short term rates will keep falling.

This investment strategy is not entirely new for the Greenlight Capital boss. A similar move provided massive profits for his portfolio last year.

High inflation threats still remain a potential roadblock for this dovish scenario. Einhorn admitted cuts would be difficult if inflation hits the 4% to 5% level again.

Key Drivers for Gold

Besides rate instruments, Einhorn also holds a massive investment position in gold. This precious metal usually acts as a solid hedge against inflation risks.

Gold prices dropped briefly after the announcement of Warsh as central bank chair. However the yellow metal futures have sharply rallied back up right now.

According to recent market data, gold futures have surged over 17% this year. This massive rally is driven by its status as a primary global reserve asset.

Unstable trade policies in the United States sparked major concerns among partner countries. They started shifting to non dollar assets to settle various international trade transactions.

Einhorn also highlighted fundamental issues in current US fiscal and monetary policies. The country recorded an almost 6% budget deficit amid a full employment environment.

That fiscal deficit situation is considered highly illogical for a long term outlook. Therefore shifting portfolios toward gold becomes a very rational investment decision right now.

That’s the market update worth watching today. Follow Gotrade News for timely coverage on US stocks, ETFs, and macro moves that shape market direction. For a structured starter guide, visit the Gotrade Blog to learn the basics and build your plan.

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Reference:

• Seeking Alpha, The Fed will cut interest rates ‘a whole bunch of times…substantially more than two’ – Greenlight Capital’s David Einhorn. Accessed on February 12, 2026

• CNBC, David Einhorn says the Fed will cut ‘substantially more’ than two times. So he’s betting big on gold. Accessed on February 12, 2026

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