Federal Reserve officials, including Jerome Powell, have signaled a likelihood of resuming rate cuts, with Powell highlighting labor market softness at Jackson Hole, and other officials like Christopher Waller and John Williams supporting potential easing depending on labor data.

UBS maintains a target of $3,700 per ounce for gold through June 2026, citing lower real rates and geopolitical tensions as factors supporting this outlook.

Investors are advised to capitalize on the policy shift by investing in high-quality fixed income assets such as medium-term corporate bonds, which currently offer yields above cash and could benefit from further rate cuts.

The economic environment is becoming more favorable for easing, with U.S. GDP growth at 1.2% in the first half of 2025 and expectations of continued economic softness.

Market expectations show an 83% probability of a 25 basis point rate cut in September, with declining Treasury yields and a wide two- to ten-year spread indicating anticipation of easing.

Labor market conditions are cooling, increasing the risk that employment data will heavily influence Fed decisions, especially as inflation remains manageable at 3.1% in July and is projected to rise gradually.

UBS forecasts the Federal Reserve will implement a series of interest rate cuts totaling 100 basis points over the next four meetings starting in September, reflecting increasingly dovish signals from policymakers.