Citigroup Predicts Gold to Reach Record High of $3,000

Citigroup anticipates gold prices to surge to an unprecedented $3,000 per ounce within three months. This surge is attributed to heightened geopolitical tensions and trade concerns fueled by President Donald Trump's policies.

Amidst Trump's proposed tariffs that pose threats of curbed economic growth and inflation, investors are seeking refuge in safe-haven assets such as gold. Additionally, central banks are expected to continue expanding their gold reserves.

"The gold bull market is poised to persist under Trump's second term," assert Citi analysts, citing risks like decelerating growth and elevated interest rates. Gold has ascended to successive highs in recent days, fueled by ongoing trade disputes between the US and China and the possibility of Trump imposing tariffs on additional countries.

Citi has revised its three-month gold price target from $2,800 per ounce to $3,000, a level already breached by the precious metal. Gold is currently trading at $2,867.15 as of 12:38 p.m. in London, just under $20 shy of its latest record set on Wednesday.

The bank also observes that a strengthening US dollar will provide incentives for emerging market central banks to bolster their gold holdings in support of their currencies, while investors will seek both physical gold and exchange-traded funds.

Trade-war apprehensions have prompted London dealers to transfer metal to the US, fearing potential tariffs on bullion. Premiums on Wednesday indicated an approximately 20% chance of Trump including gold in a 10% global tariff, according to Citi.

"A potential peace deal between Russia and Ukraine and clarification on whether gold will be exempted from tariffs could offer a buying opportunity within the next 2-3 months," the Citi analysts remark. The bank has raised its annual average price target for gold by $100 to $2,900 per ounce, while maintaining its 6-12 month target of $3,000.

The Bloomberg Dollar Spot Index has climbed by 0.3%. Silver and palladium have witnessed minor declines, while platinum has shown a slight uptick. Bullion prices rose earlier in the week following President Trump's remarks about potentially seizing Gaza and his desire to initiate a new nuclear deal with Iran. The US is also anticipated to unveil a plan to end the Russia-Ukraine conflict next week.