Polymarket bettors now see an 85% chance the Federal Reserve will not cut rates at all in 2026, a sharp jump from earlier this month. The shift comes as August gold futures opened near $4,013 an ounce and later traded around $4,063, reflecting deepening unease over inflation and the Middle East conflict.
Gold's rally gathers pace
August gold futures broke above $4,000 for the first time in the current cycle, opening at $4,013 before climbing to $4,063. The move extends a weeks-long rally driven by safe-haven demand. Investors are pricing in prolonged geopolitical risk from the Middle East, along with stubborn inflation that keeps the Fed on hold.
Fed decision in focus
All eyes are on Wednesday's Fed rate decision. While the central bank is widely expected to hold rates steady this week, the bigger question is the path for 2026. Polymarket's odds for zero cuts have risen to 85%, up from around 60% a month ago. That suggests traders see the Fed staying hawkish even as the economy shows mixed signals.
Inflation and geopolitics drive sentiment
Middle East conflict and inflation worries are influencing market sentiment across asset classes. Gold's surge is the most visible sign, but bond yields have also moved. The combination of higher-for-longer rate expectations and geopolitical uncertainty is keeping risk appetite in check.
Wednesday's Fed decision will give the clearest signal yet on whether the central bank shares the market's view of a prolonged pause. If the statement or dot plot hints at cuts, gold could pull back. If not, the 85% odds may prove conservative.
