David Einhorn says the Fed will cut ‘substantially more’ than two times. So he’s betting big on gold

Greenlight Capital’s David Einhorn anticipates the Federal Reserve will issue more interest rate cuts this year than what’s being anticipated and that’s giving him greater confidence in his gold bet.

While rate cut expectations diminished a bit Wednesday following the much better-than-expected January jobs report, traders are still currently pricing in a more than 88% chance that the central bank will make two quarter percentage point cuts by the end of the year, according to the CME FedWatch Tool.

But Einhorn said that the market viewing the latest jobs figures as a reason not to cut is “wrong.” In fact, he thinks the rate cuts number could be higher than that, as he expects Kevin Warsh – President Donald Trump’s pick to succeed Jerome Powell as Fed chair – is going to be able to persuade the committee to do so.

“If we have 4% or 5% inflation, sure, then he won’t be able to persuade people, but otherwise he’s going to argue productivity,” Einhorn said on CNBC’s “Money Movers” to Sara Eisen on Wednesday, adding that Warsh, in his view, is going to take the position of cutting “even if the economy is running hot.”

“I think by the time we get to the end of the year, it’s going to be substantially more than two cuts,” he continued.

The hedge fund manager also owns gold, which sold off at the end of last month after Trump announced Warsh as his nominee for Fed chair, as the move eased anxieties on Wall Street surrounding Fed independence.

The yellow metal – typically viewed as an inflation hedge – has since seen some recovery, with gold futures being up more than 17% this year. That’s after it surged more than 60% in 2025 amid threats to central bank independence as well as heightened geopolitical tensions and unstable trade policy. Since 2024, it’s surged more than 120%.

Einhorn — who gained notoriety in 2008, when he bet against Lehman Brothers at the Sohn Investment Conference just months before the investment bank declared bankruptcy — pointed out that gold has actually gone up over the past couple years as a result of “becoming the reserve asset” to own among central banks around the world.

“U.S. trade policy is very unstable, and it’s causing other countries to say we want to settle our trade in something other than U.S. dollars,” he said.

In the long term, he said that a reason to own gold is due to the fact that the current relationship between our fiscal and monetary policies “don’t make any sense.” He also said that other major developed currencies around the world are “as bad or worse” than the U.S.

The U.S. dollar suffered its biggest single-day drop since April 2025 last month after Trump said he wasn’t concerned about the currency’s recent weakness.

“There are some issues that sometime over the next number of years could play out with some of the major currencies,” he said.

Deeming betting on more cuts as “one of the best trades out there right now,” Einhorn said he was also long futures on SOFR (Secured Overnight Financing Rate), which essentially is a bet that short-term rates will continue to go lower.