Citi cuts near-term gold target, warns prices could slide another 20% amid easing risk premium – Firstpost

Citigroup has turned cautious on gold’s near-term prospects, lowering its three-month price target for the precious metal to $4,000 per ounce from $4,300, as improving macroeconomic conditions and weakening safe-haven demand temper the rally that pushed bullion to record highs earlier this year.

In a research note, Citi’s commodities strategists said the immediate upside for gold appears limited, pointing to stabilising real yields, a firmer US dollar and easing geopolitical tensions that have reduced demand for defensive assets.

“We see limited catalysts for a sustained move higher in the very near term,” the analysts said, adding that central bank purchases and exchange-traded fund (ETF) inflows have also moderated in recent weeks.

The revised forecast comes after a dramatic shift in Citi’s outlook. In January, the bank had raised its three-month gold target to $5,000 per ounce, citing heightened geopolitical risks, concerns around Federal Reserve independence and tight physical market conditions. While gold subsequently climbed to fresh all-time highs, Citi now believes the market is struggling to find new drivers for another leg higher.

The brokerage warned that gold prices could face additional downside pressure over the coming months. Analysts said bullion could potentially retreat towards $3,500 per ounce, nearly 20 per cent below current levels, if macroeconomic conditions remain supportive of higher real rates and a stronger dollar.

According to Citi, uncertainty surrounding the Strait of Hormuz, elevated energy prices and changing central bank demand patterns remain key variables for the gold market. Higher inflation-adjusted interest rates and reduced investor appetite for safe-haven assets could further weigh on prices in the short term.

“The skew of risks in the short term looks negative,” the bank said, noting that buying gold on dips currently requires confidence that geopolitical tensions will not re-escalate.

Despite the near-term caution, Citi remains constructive on gold over a longer horizon. The bank retained its six-to-12-month target of $4,500 per ounce, with further upside possible if economic growth weakens sharply, inflation resurges or the Federal Reserve pivots towards monetary easing.

Citi also reiterated its longstanding view that silver could outperform gold during the current precious metals cycle, while industrial metals such as copper and aluminium are expected to emerge as stronger performers in the second half of 2026 as investors shift focus towards global growth and infrastructure demand.

Spot gold was trading near $4,330 per ounce on Tuesday, remaining above the $4,300 mark despite recent pressure from stronger US economic data and fading geopolitical concerns.