Gold Prices May Climb to $3,000/oz Within the Next 12 Months: Citi

Gold prices are projected to reach as high as $3,000 within the next year, according to analysts at Citi. This forecast is influenced by strong physical demand, central bank purchases, and broad macroeconomic conditions that collectively create a bullish sentiment for gold.

Citi analysts noted that while the gold price may not rise in a straight line, they expect average prices to trend upward during the second half of 2024 and into 2025. They believe the market will remain supported above $2,000 to $2,200 per ounce, with the potential for regular tests of historical highs by the end of 2024, ultimately reaching $3,000 in 2025.

Several critical factors contribute to this optimistic view. For one, the market has shown resilience, with gold prices climbing to $2,400 per ounce despite challenges such as a strong US dollar, high interest rates, and solid equity markets. A shift in US economic growth trends could be beneficial for gold, as it would likely increase demand for safe-haven assets.

In the coming 6 to 12 months, Citi expects the economic risk to lean toward slower growth and decreasing yields. Election uncertainties in the US could potentially widen fiscal deficits, further increasing demand for gold as an alternative to fiat currencies.

Additionally, anticipation of peak interest rates bolsters this positive outlook. A potential easing of monetary policy by the Federal Reserve, coupled with an uptick in Treasury markets, should create favorable conditions for gold. Citi’s economists are predicting a US recession later in 2024, which could drive yields lower and raise gold prices.

Official gold demand from the sector remains strong, particularly among emerging market central banks, which have been key buyers and are expected to continue this trend. Additionally, there is robust retail demand from China, where consumers are accumulating gold at record levels. Analysts have noted that strong price premiums for gold in China suggest healthy demand that may persist.

Citi is also optimistic about other precious metals, forecasting that silver prices could rise to around $38 per ounce over the next year. This increase is expected to be driven by strong industrial demand, notably from the solar power and electric vehicle sectors. For copper, analysts anticipate prices could reach new all-time highs of $12,000 per tonne by the beginning of next year, propelled by China’s energy transition initiatives and expected grid-related investments.