Could Gold Hit $3,000? Citi Analysts Say It’s Possible in 2025

Gold at $3,000 an ounce? From current levels, that would mark a nearly 50% increase in price. While it’s not their base case, the global banking giant—Citi—highlighted economic scenarios which would support a massive increase in the price of gold to $3,000 in 2025.

So what could push price gold to $3,000? Aggressive central bank purchases, stagflation, and a global recession are all triggers that could drive the price of the yellow metal to $3,000 an ounce, Aakash Doshi, Citi’s North America head of commodities research, told CNBC. What are the dynamics around these three potential triggers? Let’s explore.

Central bank purchases

It’s no secret that central banks have been on a gold buying spree, with gold purchases hitting record levels in the last two years.

Why are they buying? For central banks, gold is increasingly being considered an alternative to fiat reserve currencies like the U.S. dollar, euro, and Japanese yen—and central banks are stocking up. They also see gold as a way to diversify geopolitical risk and ensure access to liquidity without credit risk.

In the first nine months of 2023, central banks bought an astonishing net 800 tonnes of gold, 14% higher than the same period last year, according to the World Gold Council.

Citi weighs in on what how that trend could support gold prices ahead: “The most likely wildcard path to $3,000/oz. gold is a rapid acceleration of an existing but slow-moving trend: de-dollarization across Emerging Markets central banks that in turn leads to a crisis of confidence in the U.S. dollar,” Citi analysts wrote in a recent note.

Stagflation

Citi’s Doshi called a stagflation scenario a “low probability”— nonetheless, gold would benefit if this were to unfold.

What is stagflation? It’s a mix of high inflation and slow economic growth. The U.S. experienced this—painfully—in the 1970’s. It’s interesting to look at how gold performed in that period.

Between 1973 and 1979, gold produced an astonishing 35% annual return.
In six of the last eight recessions, gold outperformed the S&P 500 by 37% on average.

These numbers demonstrate the extraordinary diversification power that gold can generate for your portfolio—especially in uncertain macroeconomic times.

Global recession

Last but not least, the last trigger that could send gold to $3,000 according to Citi is a global recession. This scenario also seen as “low probability” would force the Federal Reserve to cut interest rates quickly to help support economic growth. Typically, gold reveals an inverse relationship with interest rates, meaning as interest rates fall—gold climbs. A rapid cut in rates would be very beneficial to gold.

The bottom line

While these scenarios may or may not come to pass, what is certain is that gold continues to provide investor’s a bedrock of safety. Gold is a safe haven and performs well during economic uncertainty, stock market declines, recessions and financial crises. Gold is a dependable insurance policy for your wealth. Do you own enough to protect and grow your wealth in the months and years ahead? Even if these three scenarios don’t come to pass, Citi still forecasts a new record high for gold by the end of 2024. That will make today’s gold prices seem like a bargain.

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world, and the latest tangible assets news delivered to your inbox weekly.

The post Could Gold Hit $3,000? Citi Analysts Say It’s Possible in 2025 appeared first on Blanchard and Company.