Analysts at Citi have expressed optimism regarding the outlook for gold demand, anticipating robust growth in the second half of the year despite a recent slowdown in central bank purchases. In a report released Wednesday, Citi’s commodity analysts suggested that solid demand could propel gold prices to as high as $2,600 per ounce by the end of 2024, driven by renewed investor interest and potential record-breaking central bank acquisitions.
While acknowledging that the People’s Bank of China has refrained from increasing its gold reserves for two consecutive months, Citi remains bullish on overall central bank demand. Their projections indicate an expected 5.8% year-on-year increase, with a bullish scenario potentially pushing acquisitions beyond 1,250 tons for the year.
Citi’s optimism stems from the view that official sector demand, which has stabilized at approximately 28-30% of global gold mine production since 2022, could further rise to 35% under favorable conditions. Factors such as trade tensions and U.S. fiscal policy concerns contribute to this bullish outlook.
Additionally, Citi anticipates growth in retail consumer and investor interest in gold, supported by potential Federal Reserve rate cuts and ongoing challenges in the U.S. labor market, which may bolster demand for the precious metal.
“We expect continued strong physical uptake of gold over the next year, alongside heightened paper demand,” wrote the Citi analysts. They foresee gold prices trading in the range of $2,800 to $3,000 per ounce by mid-2025, underlining their positive outlook amidst evolving market dynamics.
