Citigroup analysts say the recent rally in gold could cause bullion to “shine as bright as a diamond” and could push the precious metal above $3,000 an ounce in the next six to 18 months. .
Spot gold traded at $2,383 an ounce on Tuesday, just below the all-time high of $2,448 reached last Friday ahead of Iran’s missile attack on Israel.
“Gold’s recent rally has been driven by geopolitical heat and coincided with record levels in equity indexes,” Citi said in a note on Monday.
Gold, which maintains its value as a hedge against inflation, has traditionally performed well in the face of economic uncertainty as investors seek more stable assets.
Since the beginning of the year, gold prices have risen more than 15% year-to-date on the back of rising tensions in the Middle East and the ongoing war between Russia and Ukraine.
The stubborn inflation plaguing the United States is also pushing up gold prices.
The U.S. Labor Department reported this month that inflation rose 3.5% in March, again higher than expected.
The numbers cast doubt on the Federal Reserve’s interest rate schedule, which is widely expected to be lowered from its current range (between 5.25% and 5.5%) this fall.
Gold prices have traditionally been inversely related to borrowing rates, so the combination of upcoming interest rate cuts and Iran’s April 13 attack makes gold a more attractive asset than fixed income assets such as bonds, which have lower returns than precious metals. It will be. In the coming weeks.
Citi analysts, led by Aakash Doshi, Citi’s head of North American commodity research, said they “expect 6 million to 18 million gold at $3,000 an ounce.” Ta.
The bank currently estimates that the average price of gold in 2024 will reach $2,340, but they write that trading will “regularly test and break” above $2,500 in the second half of the year.
Citi also “significantly revised upwards by 40%” its 2025 average price forecast to $2,875.
Citi added that gold’s so-called “price floor” also rose from about $1,000 to $2,000 an ounce, according to CNBC.
Goldman Sachs on Friday called the gold market an “unwavering bull market” and revised its price target for the yellow metal upward from $2,300 to $2,700 an ounce by the end of the year, CNBC first reported.
Costco has been a beneficiary of recent gold prices, with Wells Fargo estimating the membership retailer is making as much as $200 million a month in revenue from one-ounce bars alone.
If Wells Fargo’s estimates are correct, Costco’s gold-related revenue will rapidly accelerate from the $100 million in sales of one-ounce gold bars in the first quarter of its fiscal year ending in late 2023.
“Our research shows significant interest, given aggressive cost pricing and strong customer confidence,” Wells Fargo equity analyst Edward Kelley said in a note to clients last week. I can see that it is being received.” According to CNBC.
Costco does not disclose the price of its near-pure 24-karat gold bars to non-members, but wholesalers are selling them for 2% more than the spot price, which was about $2,389 per ounce as of Tuesday morning. It is estimated that a fee is charged.
