Citigroup’s most optimistic projection for gold, once considered an outlier scenario, is now on the brink of realization, with the banking giant anticipating a surge to $3,000 per ounce by 2025. Aakash Doshi, Citi North America Head of Commodities Research, revealed this transformation of outlook, indicating a shift from a $2,000 baseline forecast just two months prior.
Speaking with Yahoo Finance on Tuesday, Doshi highlighted the remarkable evolution in gold valuation. “In the summer of 2019, I was in your studios calling for $2,000 an ounce as a base case over the next 12 months,” he recalled. “Now we think $3,000 an ounce is in play over the next year or so.”
Doshi attributed this bullish momentum primarily to surging investor demand, emphasizing the convergence of robust financial interest with a resilient physical market. He underscored the global trend of heightened bar and coin sales, particularly evident since the onset of the pandemic, surpassing pre-COVID levels.
Moreover, Doshi pointed to a notable trend in central bank acquisitions, particularly in emerging markets, which have contributed substantially to gold demand, reaching unprecedented levels in recent years.
Despite fluctuations in key indicators such as the dollar’s strength and treasury yields, Doshi emphasized the enduring bullish sentiment surrounding gold. He suggested that prevailing macroeconomic factors are poised to align with the robust physical demand, further propelling gold prices upward.
Doshi also noted the stabilizing effect of central bank purchases on the gold market, citing their role in elevating the price floor and mitigating downside volatility.
Addressing concerns over escalating debt burdens globally, Doshi suggested that gold investors are increasingly turning to the precious metal as a hedge against economic uncertainties. He highlighted the potential for gold to establish a new support base around the $1,900 to $2,000 mark, with prices anticipated to trend higher in the foreseeable future.
Despite the backdrop of a more hawkish Fed stance, Doshi expressed confidence in gold’s resilience, suggesting that market expectations for interest rate hikes may have peaked. He emphasized the Federal Reserve’s commitment to maintaining accommodative monetary policy amidst tightening financial conditions.
Furthermore, Doshi speculated on the potential catalysts for further gold appreciation, including the prospect of a U.S. recession, which could further bolster the case for a $3,000 per ounce valuation within the coming months.