Citi increases gold forecasts due to tariff uncertainty and central bank demand

Citi Research raised its average gold price forecasts for the near term and 2025, citing geopolitical and trade war risks under U.S. president Donald Trump as well as robust central bank purchases.

The bank raised its forecast for 2025 to $2.900 per ounce, up from $2.800, and increased its price target by three months to $3,000 an ounce.

Citi stated in a Thursday note that "the gold bull market appears set to continue under Trump 1.0, with trade wars & geopolitical tensions strengthening the trend of reserve diversification / de-dollarization and supporting official sector gold demand from emerging markets."

Trump imposed an extra 10% tariff on all Chinese imports to the U.S. on Tuesday, and China responded by imposing tariffs on U.S. imported goods. This renewed the trade war between two of the world's largest economies. Trump, however, on Monday backed down from his threat to impose 25% tariffs on Mexico or Canada.

On Wednesday, spot gold reached a new record of $2,882.16. This was boosted by the uncertainty surrounding Trump's tariff policy.

The bank stated that, despite the rapid pace at which global gold reserves have been purchased in the last few years, it still expects the official sector's gold demand to remain robust and above Ikt (1 000 tons) per annum over 2025-2026.

The World Gold Council (WGC), which represents the global gold industry, said that the demand for gold, including the over-the counter trading, will reach a new record in 2024. It also noted that central banks increased their purchases in the fourth-quarter.

Citi's base case does not include gold in any blanket tariffs for the second quarter of 2025.

The bank said that "Gold trading (COMEX and loco London) implied a 20% probability of Trump including gold as part of a blanket 10% tariff on all U.S. Imports by February 5, which is lower than the 50%-60% implied probabilities for copper, silver, and platinum."

Stocks of gold in COMEX approved warehouses Market players have sought to secure their supply in order to protect themselves against possible import tariffs. Reporting by Anushree mukherjee in Bengaluru and Ashitha s Shivaprasad, Editing by Mark Potter

(source: Reuters)