Citi has raised its three-month gold price target to $3,200 per ounce, up from its previous estimate of $3,000, citing several key factors that are expected to drive further gains in the precious metal. The bank highlighted strong central bank demand, geopolitical uncertainty, and rising investment flows as major contributors to the price rally.
Over the past year, gold prices have surged by 50%, crossing the $3,000 per ounce mark. This rise has been largely driven by robust central bank buying, particularly from China, as well as growing demand for hedges against downside risks such as the impact of tariffs on global growth and asset markets.
Citi’s analysts maintain a bullish outlook for gold, recommending investors buy during any significant dips, as they believe the ongoing gold bull market will continue to be supported by tariff concerns and geopolitical instability, particularly in emerging markets (EM). They emphasize that while $3,000 per ounce is a critical psychological level that may trigger some profit-taking, macroeconomic factors should keep investment demand high.
Bull-Case and Bear-Case Scenarios
Citi’s base-case forecast for the next six to twelve months remains at $3,000 per ounce. However, in their bull-case scenario, which has a 30% probability, the bank sees the price of gold potentially reaching $3,500 per ounce by the end of the year. This would be driven by heightened hedging and investment demand, fueled by fears of a U.S. economic slowdown or stagflation.
On the other hand, even in a bear-case scenario, where the U.S. economy remains resilient, Citi expects gold to hold above $2,500-$2,600 per ounce. This would be supported by continued central bank buying and strong retail demand.
Long-Term Outlook
Looking further ahead, Citi remains optimistic about gold’s prospects in 2025, with the price expected to remain above $3,000 per ounce. The bank notes that investment demand, as a share of mine supply, is expected to stay above 90% for the rest of the year, ensuring a solid foundation for prices.
Overall, Citi’s outlook reflects a continued bullish sentiment for gold, driven by macroeconomic uncertainties, geopolitical tensions, and sustained central bank support. Investors are encouraged to maintain exposure to gold as a hedge against these risks, with the potential for further upside in the event of a U.S. economic downturn.
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