With the recent geopolitical tensions creating ripples across markets, it is no surprise that gold is feeling the effect as well, and analysts from Citigroup (NYSE: C) predict that the precious metal could surpass the price of $3,000 per troy ounce in the following months.
As it happens, tensions escalating in the Middle East after Iran launched more than 300 drones and missiles at Israel (most of which Israel intercepted with its Iron Dome) seem to have kick-started a new rally for gold, as Citi wrote recently, according to The Wall Street Journal report on April 16.
Indeed, amid fears that this incident could escalate into a larger conflict, particularly as Israel’s leaders promised to “exact a price” from Iran, gold has renewed its reputation as a safe haven commodity, and buying could intensify in the next half-year to year-and-a-half.
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Gold price prediction
Specifically, Citigroup’s team of experts explained to their clients in a recent note that:
“The recent gold rally has been aided by geopolitical heat and is coinciding with record equity index levels. (…) We project $3,000/oz gold over the next 6-18 months.”
In their view, this price increase will likely stem from increased flows from managed money players, who are already demonstrating signs of catching up with demand from central banks and consumers in China, in addition to the start of the United States Federal Reserve’s cutting cycle or potential recession.
Gold price analysis
Meanwhile, gold has continued to break its price records since earlier this year and is currently changing hands at the price of $2,406.30 per ounce, recording a very slight decline of 0.062% in the last 24 hours but climbing 1.93% on its monthly chart and advancing 11.20% over the past month, as per data on April 17.
It is also important to note that Bloomberg’s senior commodity expert, Mike McGlone, is also confident that gold would hit the $3,000 price tag per ounce due to the interplay of two important financial indicators – the lowest CBOE S&P 500 Volatility Index (VIS) and the highest US T-bill rates since 2007.
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