Citigroup predicts gold price surge, cites US economic risks and tariffs.

Citi now bets on gold rally due to US economic downturn and tariffs driving inflation. Analysts expect gold to reach a record high in the short term, with a price range of $3,300 to $3,600 per ounce in the next three months, contrasting with their previous June forecast of below $3,000 per ounce. The change in stance puts Citi in line with Goldman Sachs and Fidelity International analysts.

Citi has significantly revised its gold price forecast, expecting the precious metal to rally to a record high in the near term. The bank now anticipates gold to trade between $3,300 and $3,600 per ounce over the next three months, up from its previous June forecast of below $3,000 per ounce. This change in stance aligns Citi with other bullish analysts at Goldman Sachs and Fidelity International [2].

The shift in Citi's outlook is driven by several factors. Firstly, the deteriorating outlook for U.S. growth and inflation has been exacerbated by President Trump's recent tariff announcements, which have sparked fears of a global trade war. The tariffs, imposed on numerous trading partners including Canada, Brazil, India, and Taiwan, are likely to stay in place, according to Trade Representative Jamieson Greer [1].

Secondly, weaker U.S. labor data in the second quarter of 2025 and concerns about the Federal Reserve's credibility have contributed to the bullish outlook. Additionally, elevated geopolitical risks, particularly the Russia-Ukraine conflict, have further bolstered demand for gold as a safe-haven asset [1].

Citi's new forecast is also supported by the strengthening demand for gold. The bank estimates that gross gold demand has risen by over one-third since mid-2022, nearly doubling prices by the second quarter of 2025. This demand has been driven by strong investment demand, moderate central bank buying, and resilient jewelry demand despite higher prices [1].

Gold's recent performance reflects these factors. After rallying sharply in the early part of the year and hitting a record high above $3,500 per ounce in April, gold has been in a holding pattern for the last few months. However, the latest tariff announcements and economic uncertainties have pushed gold prices higher, with spot gold trading at $3,356.88 per ounce as of Monday [1].

Despite the near-term bullish outlook, Citi maintains a more cautious stance on gold in 2026, citing potential US hiring resumption and possible stimulus from the One Big Beautiful Bill Act [2].

In summary, Citi's revised gold price forecast reflects the deteriorating U.S. economic outlook, inflation concerns, and geopolitical risks. The bank's new outlook puts it in line with other analysts who expect gold to reach record highs in the short term.

References:
[1] Reuters. (2025, August 3). Citi raises gold forecast to $3,500 over next 3 months on negative US outlook. Retrieved from https://kfgo.com/2025/08/03/citi-raises-gold-forecast-to-3500-oz-over-next-3-months-on-negative-us-outlook/
[2] Bloomberg. (2025, August 17). Citi gold bears turn bullish. Retrieved from https://finance.yahoo.com/news/citi-gold-bears-turn-bullish-081716113.html