Citi Raises Gold Forecast to $3,500/oz Amid Weak US Outlook

Gold bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025.

Citi increased its gold price forecast for the next three months to $3,500 per ounce from $3,300 on Monday, adjusting the expected trading range to $3,300–$3,600 from $3,100–$3,500. This change reflects concerns over a weakening near-term US growth and inflation outlook.

The bank stated that ongoing US growth challenges and tariff-related inflation, combined with a softer dollar, are expected to push gold prices moderately higher, reaching new all-time highs.

Last week, US President Donald Trump imposed steep tariffs on exports from numerous trading partners, including Canada, Brazil, India, and Taiwan. Trade Representative Jamieson Greer said these tariffs are likely to remain in place amid ongoing negotiations.

The US dollar weakened after a rise of 73,000 jobs in nonfarm payrolls last month, following a downward revision to 14,000 jobs in June. This strengthened hopes for a Federal Reserve rate cut in September, with markets now pricing in an 81% chance, according to the CME FedWatch tool.

Citi also pointed to weaker US labour data in the second quarter of 2025, rising doubts about the Federal Reserve’s credibility, and increased geopolitical risks linked to the Russia-Ukraine conflict.

Gold, regarded as a safe-haven asset during times of political and economic uncertainty, tends to perform well in a low-interest-rate environment.

The bank estimates gross gold demand has risen by more than one-third since mid-2022, nearly doubling prices by the second quarter of 2025. This growth is attributed to strong investment demand, moderate central bank buying, and steady jewellery demand despite higher prices.

At 0340 GMT on Monday, spot gold was trading at $3,356.88 per ounce.