Citi joins the bulls on gold and does not rule out a new price record

Analysts at Citigroup raised their forecast for gold price growth to $3600 per ounce in the near future, while earlier they expected $3300. The reasons for the revision were the slowdown in the U.S. economy and increased inflationary pressure due to new trade duties, which turned out to be higher than the market expected. The updated estimate brings the bank's position closer to the more bullish benchmarks of Fidelity and Goldman Sachs, which assume that gold will rise to $4000-4500 as early as 2026.

Gold could trade in a range of $3300 to $3600 an ounce over the next three months, according to a note from Citigroup analysts led by Max Layton. The upper end of that range implies a rise of about 6% relative to current levels.

That's a significant change from Citi's June forecast, notes Bloomberg. At the time, the bank lowered its short- and long-term target prices for the precious metal, expecting it could fall below $3,000 an ounce by late 2025 or early 2026 amid weakening investment demand and improving global growth prospects. Citi has now abandoned its bearish bias;

"Concerns over the health of the U.S. economy and inflation risks associated with trade duties will remain high in the second half of 2025. Combined with a weaker dollar, this could lead to a moderate rise in gold prices and new all-time highs," Citi said in a survey quoted by Reuters.

The bank estimates that overall gold demand has increased by more than 30% since mid-2022, nearly doubling the metal's price by the second quarter of 2025. This is due to steady investment inflows, moderate central bank purchases and stable demand for jewelry despite high prices, writes Investing.com. 

Citigroup analysts maintain a reserved view on 2026. In their opinion, the possible end of the pause in hiring in the U.S. and greater certainty about trade policy against the background of the launch of the stimulus program may reduce investment demand for gold.

In trading on August 4, December gold futures rose 0.9% - to $3429 per ounce - after a sharp rise on August 1, when investors bought the precious metal amid weak U.S. employment statistics and the announcement of new U.S. duties, which caused a sell-off in risk assets. 

Citi's updated forecast brings its position closer to the more optimistic estimates of Fidelity International and Goldman Sachs. 

Gold prices could rise to $4,000 an ounce by the end of next year if the dollar weakens, central banks continue to buy the metal and the Fed cuts rates to support the economy, Fidelity fund manager Ian Samson told Bloomberg.  last week. He said some clients have recently increased the proportion of gold in portfolios after prices bounced back from a record high above $3500 an ounce in April.

"Yes, gold has already risen significantly, but from 2001 to 2011 it too was in a bull market phase and rose an average of 20% per year. From 2021 to this day, similar rates. So we are not necessarily talking about overheating," Samson emphasized.

Goldman Sachs allow prices to rise to $4500 an ounce as geopolitical and economic risks intensify. 

This article was AI-translated and verified by a human editor