Citi analysts forecast a potential surge in gold prices to $3,000 per ounce within the next 12 months, driven by strong physical demand, central bank purchases, and favorable macroeconomic conditions.
“The path for gold prices may not be linear, but we expect average prices to trend higher in the second half of 2024 and into 2025,” Citi stated in a recent note. The firm anticipates gold will maintain support above $2,000-$2,200 per ounce, regularly testing nominal all-time highs before climbing to $3,000 in 2025.
Several key factors support this bullish outlook. Gold prices have already shown resilience, reaching $2,400 per ounce despite a strong US dollar, high interest rates, and robust equity markets.
“A downturn in US economic growth would be beneficial for gold, increasing demand for duration and safe-haven assets,” Citi added. The firm sees the next 6-12 months as having risks skewed towards weaker growth and lower yields. Upcoming US election uncertainties and potential fiscal deficits could further boost gold demand.
The forecast also factors in the prospect of peak interest rates. An easing cycle from the Federal Reserve, alongside a rally in Treasury markets, is expected to be a significant positive factor for gold. Citi’s economists predict a US recession in the latter half of 2024, which could drive lower yields and higher gold prices.
Additionally, official sector demand for gold remains strong, particularly from emerging market central banks, a trend expected to persist.
Citi also highlights strong retail demand from China, where consumers have been accumulating gold at record rates. “Healthy Chinese gold price premiums suggest pent-up demand may stay strong,” the analysts noted.
Turning to other precious metals, Citi forecasts silver prices to rise towards $38 per ounce over the next year, driven by industrial demand, particularly from the solar PV and electric vehicle sectors. For copper, the analysts anticipate new all-time highs of $12,000 per tonne by the end of the year, supported by China’s energy transition initiatives and expected grid-related stimulus.
