Citi Predicts Gold Bull Market Will Continue After Strait Reopening

Citi's latest commodity outlook suggests that the gold bull market may not be over yet. The bank has set a target price of $4,800 per ounce for gold in the next three months and $5,000 per ounce by the end of 2026.

This prediction is based on the assumption that the Strait of Hormuz will reopen in Q4 2026, leading to a decline in energy prices. Citi believes that falling oil prices will benefit gold through multiple channels: lower energy costs will ease inflationary pressures and allow the Federal Reserve to shift to accommodative policy, while a weaker US dollar and lower real interest rates will decrease the opportunity cost of holding non-interest-bearing gold.

Falling energy prices will also likely relieve fiscal and external balance pressures in emerging markets, releasing previously constrained physical gold demand. However, Citi notes that the current rally is still vulnerable to a short-term pullback, which it sees as an opportunity to add positions.