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Citi’s Shocking Gold Forecast: $3,000 and Climbing!

Par Vince Lanci

sur février 10, 2025

Cette contribution d'un invité est fournie par Vince Lanci.

“Using our quarterly price changes model, we see gold prices rising to well over $3,300/oz, though we view this is a bull case given the potential for jewelry and scrap over the next 12 months. We take a more conservative base case… which suggests gold increases to $2,900-3,000/oz over the next 6-12 months.”

– Citi Metals

Bullion Bank Joins Team $3,000+

CITI’s new Gold report published February 6th makes a straightforward case: Gold’s rally is being driven by physical demand, not speculation. The bank has hinted at this before in August 2024. It was also about this time other major Bullion Banks unveiled their own new physical demand-skewed models for valuing Gold. In this way, Citi, BOA, and Goldman have been ahead of the curve in sharing their methodology with investing clients.

This change in risk metrics was significant as it acknowledged China/BRICS demand and set the table for price-target upgrades regardless of what the Dollar or interest rates did. And that is exactly what we got. Gold and Silver rose dissuaded neither by Dollar strength nor higher rates since those reports in August.

Citi Says More Upside is Coming

As of two days ago, with Citi (and UBS) raising their targets, every major bullion bank has raised its price target to $3,000 now. Two of them, BOA (and today) Citi have raised their soft targets even higher.

With this latest analysis, Citi joins the $3,000 club and describes more specifically the rationale for potentially even higher prices.

Here’s a breakdown of that new report:

Bottom Line: Target Raised

Central banks are buying at record levels, investment demand is absorbing nearly all new supply, and concerns over de-dollarization are keeping gold in focus. The report outlines why these trends are likely to continue while also highlighting potential risks from trade policy, interest rates, and economic shifts.

Gold’s strength has led the bank to raise its short-term target to $3,000/oz, with longer-term targets holding steady at the same level for now (see below). The reason: 95% of mine supply is expected to be absorbed by investors by late 2025, leaving little room for price declines.

There are 4 main reasons for the price target hike and their ongoing bullishness. The Bank shares some in-depth analysis drilling into the specifics of how the secular drivers of physical Gold demand are manifesting in reality. In short, they’ve done the work.

Citi’s 4 Main Reasons

Here are CITI’s four main reasons; All of which demonstrate the growing physical gold demand seen these past two years as continuing and spreading.

1- Mine Supply is All Spoken for Now

The bank’s gold pricing model, based on physical flows, projects investment demand exceeding 95% of mine supply in Q4 2025 (Figure 15), supporting historically high gold prices.

The exact word they used was “extremely” as in: “Investment demand should underpin extremely high gold prices by historical standards.”

2- Physical Demand is Both Growing et Broadening

The bank has expanded its central bank and institutional research, forecasting sustained strong demand, particularly under Trump 2.0, which should support gold prices. Trade tariffs are expected to accelerate reserve diversification and de-dollarization among central banks, with China still leading the shift.

3- The Return of Western Investors

Private investment demand is set to rise in the coming months across bars, coins, ETFs, and OTC markets (see Figure 5). Gold is expected to climb as a hedge against mounting risks, including slowing growth, trade tensions, high interest rates, a weakening U.S. labor market, currency devaluation outside the U.S., and potential equity market declines.

It is particularly notable Citi is very much in the camp an economic slowdown is coming to the US. They view this as a time when investors will put a large portion of their wealth into Gold and Silver as they extricate themselves from Tech stocks. interestingly, Michael Hartnett, the respected CIO at BofA and a Gold and Silver bull himself of late has also intimated this. More on that below.

4- Gold Tariff Calculus is Bullish

Citi does not expect gold to be included in broad tariffs during Q2 2025, given its status as a financial asset and the legal tender classification of gold coins. However, if initial tariff announcements lack explicit exemptions, U.S. premiums could spike. Current COMEX vs. LBMA spread trading suggests a ~20% probability of gold being included. Graphics illustrating their points are included.

More importantly tariffs can only drive gold prices higher because implementation of them is a road to sanctions and wealth confiscation for nations subject to them.

Tariffs are bullish for Gold because they are bearish for Trust. Citi believes tariffs, if implmented will add at least 2% to Gold prices and 5% to Silver. We and other banks believe the threat of tariffs as long as Trump is President present a real threat for sovereigns seeking to protect their wealth and avoid what happened to Russia in 2022.

Next we explore the Geopolitical and Economic drivers behind those reasons. followed by the bank’s final price determinations for 2025.

Trump 2.0 Accelerates et Broadens Dedollarization

Despite record-breaking central bank gold accumulation in recent years, official sector demand is expected to remain quite elevated.

Drilling down into Citi’s work points to sustained central bank and institutional gold demand over the next 2–3 years, keeping prices elevated. Trump’s policies are expected to reinforce reserve diversification trends among emerging market (EM) central banks. Trade tensions and a strengthening U.S. dollar further incentivize EM central banks to increase gold holdings as currency support.

The first major wave of dedolllarization began following the Russia-Ukraine war start. China, India, and Turkey led initial purchases, with smaller EM nations also reporting sizable buy-ins. By 2H’24, multiple CEEMEA nations, including Poland, expanded reserves, with Poland on track to reach 20% gold holdings. While some nations, such as Azerbaijan and Uzbekistan, have reached their reserve allocation targets others including Serbia, have recently increased gold buying, citing diversification needs.

In summary, Dedollarization is both accelerating and broadening under Trump.

Investor Demand Will Surge on Geopol Risk et Recession Fears

Gold ETF holdings are projected to record their first annual inflow in 2025 after four years of outflows. Even under a U.S. soft landing scenario, heightened macroeconomic and geopolitical risks—including trade wars, Middle East tensions, elevated interest rates, labor market deterioration, equity market drawdowns, and portfolio hedging needs—are expected to sustain investor demand for gold.

Gold prices have rallied over the past years despite consecutive ETF outflows; we expect eventual gold ETF inflows this year amid heightened macro and geopolitical uncertainties, supporting gold prices.

On the domestic front economically speaking, they also note Gold prices tend to rise both going into and coming out of US downturns historically, as illustrated by broad measures of US unemployment.

According to the bank, U.S. labor market data reflect continued weakness despite a brief post-election rebound. Citi’s Economics department anticipates further deterioration in the Job market through spring, leading to higher unemployment and heightened equity selloff risk.

These factors correlate strongly with increased household fear, stock selling, and precautionary savings converging on rising gold demand through ETFs and physical investment channels.

Price Target Breakdown: $3,000 with Good Chances of $3,400

Citi finds that investment demand, taken relative to mine supply, is the primary driver of gold pricing. The relationship between gold prices and investment demand vs new mined supply has been remarkably strong over the past 55 annually, as well as over the past 25 years quarterly. That correlation is rising.

Our forecasts for investment and industrial demand as a share of mine supply, point to $3,400/oz prices by 4Q’25, while we take a more conservative base case which suggests gold increases to $2,900-3,000/oz over the next 6-12 months.

Currently physical demand is closing in on 95% ( as mentioned near top) of freshly mined supply. This is well above the bank’s minimum of 70% to drive prices further upwards.

Addendum: What’s New Here?

Mining supply is getting scooped up at the source now
Jewelry, relied upon as scrap, is slowly getting absorbed by ETF buying now
Physical demand is not only increasing, it is broadening
Trump 2.0 has made more nations aware of tariffs and sanctions, serving to broaden global demand in general as confiscation risk spreads
EM nations buying Gold are benefiting greatly from it as a hedge for their own currencies weakening against the strong USD. This benefit will spread as a strategy worldwide.
1. We think this is the precursor to a soft Gold Peg throughout the BRICS as China depegs from the USD and pegs to Gold. This stabilizes FX in the region as they get off Dollars.
2. More pointedly and speculatively, we also think this is why the US isn’t pushing back on higher Gold prices like it has in the past. As long as Oil is cheap, Gold is Golden.

Over all, given the physical demand and renewed tariff risk, to say nothing of the repatriating of Gold and Silver state-side, $3400 does not seem that difficult.

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