Citigroup and Bank of America Predict Gold Prices Could Reach $3,000 Within a Year

Gold prices have shown strong performance this year, increasing nearly 13% year-to-date and currently trading at $2,326.94 per ounce.

Recent reports from Bank of America and Citigroup suggest that gold prices could surge to $3,000 per ounce within the next 12-18 months, representing a potential 30% increase from current levels. Key factors driving this bullish outlook include robust physical demand, central bank purchases, concerns over U.S. Treasury securities, and anticipated Federal Reserve interest rate cuts.

Bank of America: U.S. Debt Concerns to Support Gold Bull Market

Bank of America (BofA) forecasts that gold prices could reach $3,000 per ounce in the next 12-18 months. BofA emphasized that this scenario would require an increase in non-commercial demand, potentially triggered by Federal Reserve interest rate cuts, which could lead to inflows into physically backed gold ETFs. Central bank purchases are another critical factor, as efforts to reduce the U.S. dollar’s share in foreign exchange portfolios may drive central banks to buy more gold.

BofA also highlighted that concerns over U.S. Treasury securities could sustain a gold bull market. They pointed out that significant volatility in the U.S. Treasury market represents a “tail risk” that becomes more probable over time. Moreover, the market does not need an actual disaster to spur demand for safe-haven assets; increasing fears of a potential disaster are sufficient. The liquidity of the U.S. debt market has deteriorated, and with the political deadlock and rising debt levels in the U.S., there are legitimate reasons to worry about unexpected shocks.

Citigroup: Strong Demand and Macro Factors to Boost Gold Prices

Analysts at Citigroup (Citi) predict that gold prices could soar to $3,000 per ounce within the next 12 months, driven by strong physical demand, central bank purchases, and supportive macroeconomic factors.

Citi forecasts that gold will find support above the $2,000-$2,200 per ounce range and could test all-time highs by the end of 2024, potentially reaching $3,000 per ounce by 2025. Several key factors underpin this bullish outlook:

Resilient Market Amid Asymmetric Risks: Despite a strong dollar, high interest rates, and robust U.S. equity markets, gold prices have rebounded to $2,400 per ounce. If U.S. economic growth experiences a downturn, it would likely boost demand for gold as a safe-haven asset. Over the next 6-12 months, U.S. economic risks are skewed towards weaker growth and lower yields. The uncertainty surrounding the U.S. presidential election could widen the fiscal deficit and increase term premiums, further enhancing demand for gold as a safe haven.

Interest Rate Peak Outlook: The prospect of peak interest rates also supports this optimistic forecast. A dovish Federal Reserve cycle combined with a rebound in the U.S. debt market would be significant bullish factors for gold. Citi anticipates a U.S. recession in the latter half of 2024, which could drive yields lower and push gold prices higher.

Persistent Central Bank Demand: Global central banks continue to exhibit strong demand for gold, particularly those in emerging markets. This trend is expected to persist, further bolstering gold prices.

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