Prediction market cools on bullion after Fed hawkishness revives rate-hike bets

Prediction market cools on bullion after Fed hawkishness revives rate-hike bets

Tue, September 1, 2026 at 1:28 PM GMT+3 2 min read

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Traders on Polymarket now put the chance of gold reaching $5,000 an ounce by the end of December at little better than even.

The online prediction platform, where users bet on future events, gives near-certain odds that bullion touches $4,500 this year.

Bets on a climb to $6,000, a level JPMorgan and other Wall Street banks still forecast for this year, have slumped to around 13%.

Citi, by contrast, is sticking with a $5,000 target over the next six to 12 months, having lifted its shorter-term forecast to $4,800.

The repricing follows a sharp reversal that has stripped gold of much of the ground won during a powerful August rally.

Gold slipped below $4,450 an ounce on Monday, near a two-week low, after falling more than 3% on Friday in its steepest one-day drop since June.

The slide came after Federal Reserve chair Kevin Warsh warned in a speech at Jackson Hole that inflation was not easing and the central bank's task was not complete.

His comments revived bets on an interest rate rise in September, with futures now pricing the chance at about 60%, up from roughly 36% a week earlier.

Higher rates dull the appeal of gold, which pays no income, by lifting the returns on offer from cash and bonds.

Rising oil prices added to the strain after the United States said it had struck an Iranian island in the Strait of Hormuz, drawing a response from Tehran.

Even after the retreat, gold remains up around 10% over August, its strongest monthly rise since January.

That surge was powered by the return of the debasement trade, in which investors buy hard assets to guard against a weakening dollar.

It gathered pace after the US Treasury said it would double its buybacks of longer-dated government bonds, stoking concern over the country's finances.

Gold set a record above $5,400 an ounce in late January, then slid toward $3,900 by July before rebounding through August.

A shorter-dated Polymarket contract signals near-term caution, with the odds of a return to $4,700, close to its August peak, put below one in three.