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

Citi has lowered its gold price targets, projecting a drop below $3,000 per ounce by late 2025 or early 2026 due to declining investment demand and an anticipated improvement in global growth; the bank's 0-3 month target is now $3,300 (down from $3,500) and the 6-12 month target is $2,800 (down from $3,000). This outlook is based on expectations of reduced geopolitical risks and a stabilizing U.S. economy, while Citi forecasts silver prices to rise to $40 per ounce over the next 6-12 months.

Analysis

Citigroup has revised its outlook for gold, projecting a significant decline in prices into late 2025 and early 2026. The bank lowered its 0-3 month gold price target to $3,300 per ounce from $3,500, and its 6-12 month target to $2,800 per ounce from $3,000. This bearish stance anticipates gold falling below $3,000 per ounce by late 2025 or early 2026, potentially reaching $2,500-$2,700 per ounce by the second half of 2026. The primary drivers for this forecast are expectations of diminishing investment demand and an improving global growth outlook, with Citigroup highlighting that investment demand is seen abating in late 2025 and 2026 as factors such as "President Trump popularity and US growth 'put' kicking in" come into focus, especially around the U.S. mid-terms. For the third quarter, Citi expects gold to consolidate between $3,100-$3,500 per ounce, supported by near-term factors such as geopolitical risks, potential U.S. tariff policy shifts, and U.S. budget concerns, before the anticipated downward trend begins. Citi assigns a 20% probability to its bullish scenario where gold could exceed $3,500/oz in Q3 due to heightened hedging and investment demand, and an equal 20% probability to a bearish case where prices could fall below $3,000/oz sooner if geopolitical risks ease and tariff disputes resolve, although emerging market central bank buying could provide a floor. In stark contrast, Citigroup holds a bullish view on silver, forecasting prices to reach $40 per ounce over the next 6-12 months, driven by tightening supply and robust demand. A more aggressive bullish scenario for silver could see prices hit $46 per ounce by the third quarter of 2025, contingent on a quicker resolution to U.S.-China trade tensions and a hawkish Federal Reserve.

Key Decisions for Investors

• Given Citi's revised targets and expectation of declining investment demand, investors might consider re-evaluating long gold positions (e.g., GLD) and potentially exploring tactical short strategies for late 2025 and 2026 horizons.
• Monitoring evolving geopolitical landscapes, U.S. tariff policies, U.S. budget developments, shifts in global growth outlooks, and central bank purchasing activity is crucial for assessing gold's future trajectory.
• In contrast, Citi's optimistic forecast for silver, driven by tightening supply and robust demand, suggests investors could explore opportunities for increased exposure to silver (e.g., SLV) or initiate long positions over the 6-12 month timeframe.
• Key catalysts for silver's performance, such as developments in U.S.-China trade relations and Federal Reserve policy shifts, warrant close attention for those considering silver investments.