Gold as an art market: Citi forecasts another 4% price rise by the end of the year

Citi raised its target price for gold to $4,000 an ounce next quarter, predicting a continued rally - despite a 55-year record gap between quotations and mining costs. The analyst said the precious metal is increasingly behaving "like an art market." Since the beginning of the year, spot gold prices have risen by 45%, the highest annual gain in 45 years.

Citi analyst Maximilian Leighton raised the target price of gold for the next quarter from $3800 to $4000 per troy ounce, MarketWatch reports. Citi's new target suggests the precious metal's value will rise by more than 4% from the closing level on September 29.

The analyst believes that even now that the gap between the price of gold and the cost of mining is at its highest in 55 years, the price gains will continue at least through the end of 2025. "Gold has long since decoupled from the cost of production and now looks like an art market," Leighton said in a note cited by MarketWatch.

However, the analyst added that it is impossible to predict the upper limit of gold prices now: they are simultaneously affected by both structural and cyclical factors. The first Citi includes the growth of the U.S. debt burden, doubts about the status of the dollar as the world's reserve currency and questions about the independence of the Fed. Cyclical factors include the slowdown in the global economy, weakness in the U.S. labor market and uncertainty surrounding U.S. trade policy.

Over time, the market will inevitably respond to high prices by reducing jewelry demand and increasing scrap supply, but these processes are developing slowly, the expert stressed. According to him, the flow of funds from gold and silver to industrial metals such as copper and aluminum may begin as early as 2026, if concerns about price increases, inflation and duties subside. For now, the bank is focused on short-term signals - for example, on the development of the situation around the possible resignation of a member of the Board of Governors of the Fed Lisa Cook and the decision of the Supreme Court on the duties of the administration of Donald Trump. According to the analyst, both scenarios, if realized, can support additional demand for gold.

At the auction on September 30, the spot price of gold first jumped by 1% - up to $ 3871, which was a new record for the precious metal. Then, however, quotes lost all the growth and continued trading in the minus by 0.5%. This month, the price of gold jumped by more than 10%, and since the beginning of the year it has grown by about 45%. This was the largest annual increase since 1979, notes Bloomberg.

"After continuous gains throughout September, I believe we are seeing some profit taking at the end of the month," Saxo Bank commodities strategist Ole Sloth Hansen said in a Bloomberg statement.

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