Gold Touches $5,000 As Inflation Drops To 2.4%, Polymarket Traders Expect $5,500 By Q3

Gold roared back above the $5,000 per ounce mark on Friday, following a cooler-than-expected inflation print.

The SPDR Gold Trust is up almost 2% today.

Inflation Falls More Than Expected

The U.S. Consumer Price Index rose just 2.4% year-over-year in January, the Bureau of Labor Statistics reported Friday, below the 2.5% consensus estimate and marking the lowest inflation reading since May 2025.

Core CPI, which excludes volatile food and energy prices, cooled to 2.5% annually from December’s 2.6%, hitting its lowest level since March 2021. Month-over-month, core CPI rose 0.3%, meeting expectations.

The softer inflation data keeps Federal Reserve rate cut expectations alive, with markets continuing to price in at least two cuts in 2026 despite Wednesday’s stronger-than-expected jobs report.

Prediction Markets Show Confidence

Polymarket currently shows traders assigning a 69% probability to gold hitting $5,500 or higher by the end of June, reflecting bullish conviction despite this week’s volatility.

The prediction market is confident gold will continue to outperform this year, the market Bitcoin (CRYPTO: BTC) vs. Gold vs. S&P 500 in 2026 has gold at 56%, with Bitcoin at 29% and the S&P 500 at just 16%.

The Polymarket for the number of rate cuts this year has 2 as the favorite at 27%, with 3 closely behind at 26%

What Analysts Are Saying

Goldman Sachs (GS) commodities analyst Lina Thomas noted that gold’s rally reflects a broader structural shift in commodity markets, driven by what she called “insurance-type demand.”

“Where domestic production or substitution cannot provide sufficient security of supply, governments may turn to stockpiling,” Thomas said in a recent report, adding that Goldman expects gold could reach $5,400 by year-end.

The bank highlighted how central banks have been accumulating gold at record pace as reserve managers reassessed geopolitical neutrality following the 2022 freeze of roughly $300 billion in Russian reserves.

Thomas pointed to increased market fragmentation as a key risk factor: “Thinner London inventories have created conditions for squeezes, with rallies accelerating as investor flows absorb the remaining metal in London vaults.”

The yellow metal’s recovery comes as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, while cooler inflation readings support the case for continued Fed easing.

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