Citi sees gold below $3,000 after Q3 2025 on weak demand, growth optimism

Citi has lowered its short-term and long-term price targets for gold, anticipating prices may fall below $3,000 per ounce by late 2025 or early 2026 due to declining investment demand and an improving global economic outlook; the bank now projects a 0-3 month target of $3,300 and a 6-12 month target of $2,800. Conversely, Citi forecasts silver prices to increase to $40 per ounce within the next 6-12 months, driven by tightening supply and strong demand, potentially reaching $46 by Q3 2025 in a bullish scenario.

Analysis

Citigroup has revised its outlook on gold, lowering its 0-3 month price target to $3,300 per ounce from $3,500 and its 6-12 month target to $2,800 per ounce from $3,000, anticipating a potential drop below $3,000 per ounce by late 2025 or early 2026. This bearish medium-to-long-term view is attributed to an expected decline in investment demand for gold as the global growth outlook improves and specific U.S. political and economic factors, such as "President Trump popularity and US growth 'put'," come into play. In the shorter term, specifically Q3, gold prices are expected to consolidate between $3,100 and $3,500 per ounce, supported by ongoing geopolitical risks, potential U.S. tariff policy shifts, and U.S. budget concerns, before a downward trend commences. Citi assigns a 20% probability to both its bullish scenario (gold >$3,500/oz on hedging demand) and its bearish scenario (gold <$3,000/oz on resolving trade/geopolitical tensions and a U.S. soft landing), though notes emerging market central bank buying could provide a floor. In stark contrast, Citi projects silver prices will appreciate to $40 per ounce over the next 6-12 months, driven by tightening availability and robust demand, with a bullish case scenario reaching $46 per ounce by Q3 2025, potentially influenced by a quicker resolution to U.S.-China trade disputes and hawkish Federal Reserve policy.

Key Decisions for Investors

• Investors should consider Citi's revised lower price targets for gold, particularly the projection for prices to fall below $3,000/oz by late 2025 or early 2026, when reviewing long-term allocations.
• Monitor near-term catalysts such as geopolitical tensions, U.S. tariff policy, and U.S. budget concerns, which Citi believes could support gold within a $3,100-$3,500/oz range in Q3, potentially offering tactical opportunities.
• Evaluate the bullish outlook for silver, where Citi forecasts prices reaching $40/oz in 6-12 months due to supply constraints and strong demand, presenting a potential alternative to or diversifier from gold.
• Note the assigned 20% probabilities for Citi's alternative gold scenarios, indicating that while the base case is bearish, significant event-driven upside or downside deviations remain possible, warranting close attention to evolving market conditions.