Gold prices surged to near-record highs on Tuesday, fueled by optimistic forecasts from Citigroup analysts projecting the precious metal to reach $3,000 per ounce within the next six to 18 months.
The revision in gold forecasts by Citigroup analysts Aakash Doshi and Arkady Gevorkyan reflects a shift to a more bullish stance, anticipating significant upward momentum in the price of gold. They increased their end-2024 price target by 6.8% to $2,350 per ounce and made a substantial 40% upward revision to their 2025 target, now set at $2,875 per ounce. In their communication with clients, they drew a parallel between gold and Rihanna’s song, suggesting it would “shine bright like a diamond,” with the $3,000 level potentially being attained after regularly testing $2,500 in the latter half of this year.
On Tuesday, gold prices saw a modest increase of 80 cents to $2,383.90 per ounce, following a record-high settlement of $2,383 per ounce on Monday. Meanwhile, silver prices experienced a slight pullback, down 0.8% to $28.48 per ounce.
Doshi and Gevorkyan highlighted that while geopolitical tensions have contributed to gold’s 15% climb this year, the metal’s appeal is further bolstered by other factors. These include the equity market’s record levels and the potential for a steeper risk-off environment, which could further boost prices.
Moreover, they pointed to the prospects of a Federal Reserve cutting cycle or a potential recession scenario in the U.S. or other developed markets by 2025 as additional drivers for gold inflows. Lower interest rates, typically accompanying a cutting cycle, reduce the opportunity cost of holding non-yielding assets like gold, making them more attractive to investors seeking safe-haven assets during times of economic uncertainty.
The analysts also noted gold’s decoupling from U.S. rates and the dollar, suggesting strong physical consumption drivers, including gold bar and coin purchases, imports from India and China, and central bank buying. Additionally, inflows from exchange-traded funds are expected to support the trajectory towards the $3,000-per-ounce milestone.
Furthermore, the analysts pointed out a shift in the new floor for gold prices, from $1,000 per ounce to a range between $1,850 and $2,000 per ounce. This reflects the evolving dynamics within the gold market and underscores the potential for sustained upward momentum in the metal’s price.
In summary, Citigroup’s bullish outlook for gold underscores the metal’s resilience and attractiveness as a safe-haven asset amid economic uncertainties and market volatility. Investors are closely watching these developments as they position themselves in anticipation of potential gains in the gold market.