Citi Sees Gold Price Surge if Strait of Hormuz Reopens in Q4
Citi's commodity outlook maintains a bullish view on gold, setting target prices of $4,800 per ounce for 0 to 3 months and $5,000 per ounce for 6 to 12 months. These targets are significantly higher than the current spot price of around $4,400.
The bank believes that if the Strait of Hormuz resumes normal shipping in Q4 2026, a retreat in energy prices will become an important catalyst for the next round of gold price increases.
Citi expects falling oil prices to benefit gold through multiple channels. Lower energy costs will help ease inflationary pressures and allow the Federal Reserve more room to shift to accommodative policy. A weaker US dollar and lower real interest rates will decrease the opportunity cost of holding non-interest-bearing gold.
The global energy market is currently in an abnormal state, with high refining margins that are difficult to sustain in the long term. Iran faces economic incentives to ease the blockade, while Washington's willingness to cool tensions may increase ahead of November's midterm elections.