Citibank Economists: Gold Could Drop To These Levels Soon!


Russia’s attempt to invade Ukraine was one of the most supportive factors for gold prices. In the event of geopolitical tension, investors clung to gold, while prices reached record levels not seen for a long time. While the ounce price of gold rose above $2,015, yesterday’s closing was above $2,050. Gram gold is around 946 liras. Meanwhile, analysts of Citibank, a subsidiary of New York-based Citigroup, conveyed their expectations for the precious metal. Their expectations consisted mostly of bearish.

What’s next for gold prices?

Geopolitical uncertainty supports the short-term rise in gold price. However, in the view of economists at Citibank, the rally in the precious metals market is expected to reverse. According to analysts, geopolitical tensions and increased volatility continue to be factors that will support gold prices. Analysts of Citibank state that they have increased the price target of 0-3 million dots below to $125 per ounce. However, he states that in the downward target of 6-12 million, decline expectations continue.

Analysts think that geopolitical tensions may support the precious metal in the short term, as gold trade tends to weaken with the support of the US Federal Reserve. In addition, it is thought that the high volatility in the asset markets may also support gold. Since gold is seen as a relatively more stable asset compared to others, it can be preferred in times of uncertainty.

What will happen in the medium term?

Analysts are hinting that the precious metal could pull down if higher real returns are seen in the US and stocks rise in the medium term. “In the medium term, risk premiums should erode as higher real returns and stronger stocks may repress gold prices,” analysts say. However, strong physical demand in Asia and measures to ward off recession may reduce the extent of the price drop in 2022. Analysts finally use the following statements:

Strong physical demand and recession containment measures in Asia could reduce the extent of the price drop in 2022. If bullion markets remain strong through April, it could signal a new bullish price cycle and need to rethink our gold/rate thesis.