Citigroup Inc. expects gold prices to hit a record $3,000 an ounce within three months, with geopolitical tensions and trade wars stoked by Donald Trump boosting demand for safe-haven assets.
The US president jolted markets with the prospect of tariffs that could slow economic growth, reignite inflation and disrupt global commerce. Investors will continue to seek bullion’s security and central banks are likely to keep building out their reserves, analysts including Kenny Hu wrote in a report.
“The gold bull market looks set to continue under Trump 2.0,” the Citi analysts said, citing risks such as slower growth and high interest rates.
Gold hit successive records in the past few days as concerns about the tug of war between the US and China, as well as the possibility Trump will impose duties on other nations, support bullion’s role as a store of value in uncertain times.
Citi upgraded its three-month price target for gold from $2,800 an ounce, which the precious metal has already surpassed. Gold traded at $2,867.15 as of 12:38 p.m. in London, less than $20 shy of the fresh record reached on Wednesday.
The bank also said that an appreciating US dollar will increase the incentive for central banks from emerging economies to boost gold holdings in order to support their own currencies, while investors will turn both to physical gold and exchange-traded funds.
Trade-war fears have also led dealers in London to shift metal to the US, fearing the possibility that bullion won’t be excluded from potential tariffs. Premiums as of Wednesday implied a roughly 20 percent chance of Trump including gold in a 10 percent blanket global tariff, Citi said.
“A Russia/Ukraine peace deal, and confirmation of whether gold would be exempt from broad tariffs (or not), could provide a buying opportunity over the next two to three months,” the Citi analysts said.
The bank raised its average price target for the year by $100 to $2,900 an ounce, while leaving its six-12 month price target of $3,000 unchanged.
The Bloomberg Dollar Spot Index rose 0.3%. Silver and palladium edged lower, while platinum rose.
Bullion rose earlier in the week after President Donald Trump said the US could take over Gaza, a comment that his aides sought to tone down, and that he wants to start working on a new nuclear deal with Iran. Washington is also expected to present a plan to end Russia’s war on Ukraine next week.
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