Citi has upgraded its short-term price forecast for gold to $3,500 per ounce, citing renewed tariff tensions between the United States and the European Union, as well as escalating geopolitical risks. This marks a notable reversal from the bank’s earlier consolidation call, which had expected a trading range of $3,000–$3,300 per ounce.
In a note released Sunday, the bank said it now anticipates gold will trade within a wider band of $3,100–$3,500 over the coming months. The move comes just days after U.S. President Donald Trump reintroduced the threat of a 50% tariff on EU imports, only to later delay implementation by a month following talks with European leaders.
While the short-term outlook has grown increasingly bullish, Citi maintains a more cautious stance on gold in the long run, warning that current prices may be unsustainable once some of the prevailing risk factors begin to ease.
Gold Surge Driven by Uncertainty and Demand Resilience
Gold prices have rallied sharply in 2025, gaining more than 25% year-to-date and hitting a record high in April amid concerns about the Federal Reserve’s independence and mounting U.S. fiscal imbalances. Those concerns resurfaced again this past week with a new wave of trade tensions and ongoing geopolitical uncertainty in Eastern Europe and the Middle East.
According to Citi, gold continues to benefit from a powerful combination of:
Political instability and tariff-related trade friction
A weakening U.S. dollar
Expectations of multiple rate cuts by the Federal Reserve by year-end
Ongoing robust demand from both institutional and retail buyers
The bank noted that roughly 0.5% of world GDP is now being spent on gold, the highest proportion in at least 50 years, based on its internal data. This remarkable figure reflects the surge in investment flows, particularly among retail investors in the U.S., India, and China, who are using gold as a hedge against inflation, currency volatility, and policy unpredictability.
Household Holdings and Caution on Long-Term Sustainability
Despite reaffirming its bullish near-term outlook, Citi cautions against overextending exposure to gold in long-term portfolios. The bank points to two primary concerns:
Growth Recovery and Equity Rotation: As the 2025 U.S. midterm elections approach and the Federal Reserve begins cutting rates more aggressively, Citi expects growth sentiment to stabilize, prompting some investors to rotate back into risk assets. This could eventually reduce safe-haven flows into gold.
Saturation of Retail Holdings: Citi highlights that household gold ownership is at its highest level in five decades, which may limit incremental demand. In the event of a global recovery or easing in fiscal fears, some of this gold could be sold back into the market, potentially pressuring prices.
Precious Metals Outlook: Platinum and Palladium Remain Unchanged
While gold received a notable upgrade, Citi left its platinum and palladium targets unchanged at $1,050 and $900 per ounce, respectively.
For platinum, Citi remains skeptical of recent price rallies, calling them “headline-driven.” The bank argues that a sustainable price move higher will require a clear recovery in industrial demand, particularly from the automotive and jewelry sectors.
As for palladium, Citi believes the rally offers an opportunity for producer hedging and speculative short selling. The market, it says, remains oversupplied and structurally weaker compared to other precious metals.
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