Gold Rally Expectation Cools Off: Market Predicts Slight Over 50% Probability of Reaching $5000 by Year End

BlockBeats News, September 1st. After a nearly 10% surge in August, international spot gold quickly retraced, and market expectations for further highs have significantly cooled off. Polymarket data shows that the probability of gold hitting $5000 per ounce by the end of the year is currently just above 50%, with the likelihood of reaching $4500 almost certain. The probability of surpassing $6000 has now dropped to around 13%, and the chances of a short-term return to $4700 are less than one-third.

Impacted by hawkish signals from the Federal Reserve, U.S. Treasury yields, and rising oil prices, spot gold plunged over 2% on Tuesday to around $4350 per ounce, a significant retreat from its previous high of about $4697. Following Fed Chair Powell's hawkish tone at the Jackson Hole Symposium, the market's bet on a September rate hike has increased to around 66%, and the U.S. 10-year Treasury yield has risen to around 4.78%. Meanwhile, Brent crude oil broke through $91 per barrel, further intensifying inflationary pressures.

However, the long-term bullish thesis for gold has not vanished, as concerns about fiscal deficits, government debt expansion, and U.S. dollar purchasing power continue to support the gold price. Citigroup expects gold to rise to $5000 over the next 6 to 12 months and has raised its short-term target to $4800. The current market focus will shift to U.S. employment and inflation data to assess whether gold bulls can regain momentum.