June 12 2024: Gold prices are predicted to surge to $3,000 over the next 12 months, according to analysts at Citi. This bullish outlook is supported by strong physical demand, central bank purchases, and favorable macroeconomic factors.
“The path for gold prices may not be linear, but average prices are expected to trend higher in the second half of 2024 and into 2025,” Citi analysts noted.
“We anticipate the market will be well-supported above $2,000-2,200 per ounce and will frequently test nominal all-time highs through the end of 2024,” before potentially reaching $3,000 in 2025, the firm added.
Several key factors support this optimistic projection:
Firstly, gold has shown resilience, rallying to $2,400 per ounce despite a strong US dollar, high interest rates, and robust equity markets.
“A negative shift in US economic growth should be positive for gold, increasing demand for duration and haven assets,” the note continues.
“Over the next 6-12 months, Citi sees risks skewed towards weaker growth and lower yields. US election uncertainty and a potential ‘red sweep’ could increase fiscal deficits and boost term premiums, enhancing speculative demand for gold as an alternative to fiat currencies.”
The expectation of peak interest rates also supports this forecast. An easing cycle from the Federal Reserve, along with a rally in Treasury markets, is seen as a significant bullish factor for gold. Citi’s economists predict a US recession in the latter half of 2024, which could lead to lower yields and higher gold prices.
Additionally, official sector demand for gold remains strong, particularly from emerging market central banks. This trend is expected to continue. Citi also notes strong retail demand from China, with Chinese consumers accumulating gold at record rates.
“Healthy Chinese gold price premiums indicate pent-up demand that may remain strong,” the analysts said.
Citi also has positive forecasts for other precious metals. They project silver prices to rise towards $38 per ounce over the next year, driven by strong industrial demand, particularly from the solar PV and electric vehicle sectors.
For copper, the analysts anticipate new all-time highs of $12,000 per tonne by the end of the year, supported by China’s energy transition initiatives and expected grid-related stimulus.
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