Citi Sees Gold Prices Soar to $5,000 as Energy Prices Fall

Citi has maintained its bullish forecast for gold prices, predicting they will hit $4,800 per ounce in three months and $5,000 per ounce within six to twelve months. The bank believes falling energy prices could become a catalyst for the next leg of the gold rally if shipping through the Strait of Hormuz resumes in the fourth quarter of 2026.

The global crude oil market could shift from a tight balance to oversupply if normal shipping resumes, leading to lower energy costs and reduced inflationary pressures. This, in turn, would ease pressure on the Federal Reserve to raise interest rates, making non-yielding gold more attractive. Citi notes that physical gold demand has not kept pace with price rises since August.

According to Tony Kim, global head of metals trading at Goldman Sachs, the pullback in gold prices from their January peak is an 'extended pause' rather than the end of the bull market. He attributes this to central bank gold purchases, which have surged from around 400-500 metric tons prior to the Russia-Ukraine conflict to around 1,000-1,100 metric tons.