Steve Grasso: Fed opening doors to rate cuts will bring gold higher but may take time
Speakers
Steve Grasso
— Trader
Summary
Steve Grasso discusses gold and oil outlook. He argues gold will rally when the Fed opens doors to rate cuts but it takes time. On oil, he expects demand destruction could push crude below $65 once the war resolves, with caveats.
- Gold has fallen for three straight months, longest streak in four years.
- Grasso says gold rallies on Fed rate cut actions, not expectations.
- He cites M2 money supply growth and historical real-yield moves as supportive for gold.
- Geopolitical calm could reduce gold demand, but the main driver is Fed policy.
- Crude oil is in extreme backwardation, with back months pricing around $75.
- Grasso sees demand destruction of 4 million bpd pushing oil below $65 post-war.
- He cautions that the oil call comes with a huge caveat regarding war resolution.
- The discussion includes central bank gold selling and Turkey's gold sales.
Trade Ideas
Gold rises on Fed rate cut expectations.
Gold rallies when the Fed opens the door to rate cuts, not during the lead-up. Currently, the market is not pricing in cuts, but if the Fed signals a path to cutting rates, gold should take off. The move may take time, supported by increasing M2 money supply and historical precedents where real yields went negative and gold spiked.
Oil falls below $65 after war.
Crude oil faces demand destruction of about 4 million barrels per day. Once the current war resolves (with a huge caveat), oil prices could fall below $65 per barrel. Backwardation in the futures curve already prices in lower levels around $75 later this year.
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This CNBC video, published May 26, 2026, features Steve Grasso discussing GLD, WTI. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Steve Grasso · Tickers: GLD, WTI