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According to Citi: Gold prices could soon rise by 25 percent

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According to Citi: Gold prices could soon rise by 25 percent

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Kylie Kirschner

According to Citi, gold prices could reach $3,000 per ounce in the next six to 18 months. This would correspond to an increase of 25 percent compared to the current price.

Iran’s attack on Israel over the weekend has boosted demand as investors seek safe-haven assets.

Citi sees increased chances of a setback in May or June, but expects “strong buying support” at $2,200.

This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by a real editor.

Gold prices are expected to rise 25 percent, according to Citi, as the precious metal’s appeal increases amid growing tensions in the Middle East and looming loose monetary policy.

The price of the yellow metal fell slightly on Tuesday after rising above $2,400 an ounce last week, and Citi strategists led by Aakash Doshi said momentum continued .

In a note to clients on Monday, Doshi said the bank sees gold prices rising to over $3,000 (€2,800) an ounce within the next six to 18 months, a 25 percent jump from current levels.

The team also raised its 2024 gold price target to $2,350 (€2,200) and adjusted its 2025 forecast to $2,875 (€2,700). The team also expects gold prices to regularly test and break through the $2,500 per ounce mark in the second half of 2024.

These are the reasons for the rise in gold prices

“The recent gold rally has been fueled by geopolitical tensions and coincides with record highs in equity indices, so greater de-risking should further boost prices,” Doshi wrote in the note.

Iran’s strike on Israel over the weekend has raised fears of a worsening conflict in the region, and commodities such as oil are in limbo while demand for gold is rising as investors flee to safe haven assets.

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According to Citi, gold prices have risen sharply recently despite a rise in real and nominal yields, tighter monetary policy and a rising US dollar.

“Although gold’s implied ‘maturity’ has shortened since June 2021, a possible Federal Reserve interest rate cutting cycle and a rally in Treasury bonds could boost the upside to $3,000 per ounce,” the note said.

Gold typically moves inversely to interest rates. The Fed has indicated it will cut interest rates this year, which would further push up the metal’s price, but higher-than-expected inflation in March has likely pushed the timing of rate cuts to later in the year.

Post-pandemic purchases led by China and developed markets have also contributed to massive inflows into gold-backed exchange-traded funds. This will cushion the path to $3000,” the analysts write.

Citi sees increased prospects for a price decline around May or June, but expects “strong buying support” at the $2200 threshold.

You can read the original article here.

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