Citi: Gold Supported by Risks, Easing Forecast for 2026

Citi's Gold Market Analysis

A recent analysis by Citi indicates that current gold prices are being supported by a significant convergence of geopolitical and economic risks. The bank suggests that while these factors keep prices elevated, a substantial portion of this risk premium could diminish after 2026.

Key Supporting Risk Factors

Citi identifies several core risks bolstering gold demand. These include ongoing tensions between the U.S. and China, potential conflict over Taiwan, and persistent concerns about the level of U.S. government debt. Additionally, uncertainty surrounding the development of artificial intelligence is cited as a contributing factor.

Long-Term Price Outlook

Looking ahead, Citi projects that approximately half of the risks currently priced into gold may not persist beyond 2026. The bank points to a potential end to the Russia-Ukraine war and an eventual de-escalation of tensions with Iran as major events that could significantly reduce the global risk profile, thereby lessening the safe-haven demand for gold.

Market Summary and Projections

In summary, gold allocations are expected to remain underpinned by global uncertainty in the near term. However, Citi's long-term view suggests a potential normalization as some key geopolitical drivers are anticipated to resolve, potentially leading to a fading of the metal's risk premium.

FAQ

Q: What are the main risks supporting gold prices according to Citi?
A: Key risks include U.S.-China tensions, China-Taiwan conflict potential, U.S. government debt concerns, and uncertainty surrounding artificial intelligence.

Q: When does Citi expect the risks supporting gold to decrease?
A: Citi estimates that roughly half of the current risk factors may fade or fail to persist beyond the year 2026.

Source: Investing.com