Citi Reduces Gold Exposure Amid Shift in Fed Policy Expectations

Citi has trimmed its gold positions in response to shifting expectations around Federal Reserve policy. The bank had previously increased its exposure to gold, anticipating a dovish stance from the Fed and potential US Treasury buyback announcements.

However, after the Jackson Hole symposium, market moves led Citi to reassess its view on Fed policy, repricing it as more hawkish. This change in expectations was accompanied by a rally in energy prices, further influencing the bank's gold thesis.

Citi now expects a rate hike, which has prompted the decision to reduce its gold exposure. The bank cites US interest rates as the primary factor driving gold prices, explaining that this shift in Fed policy has altered the investment case for holding gold.