A recent gold rally could have bullion “shining bright like a diamond” — with the precious metal possibly topping $3,000 per ounce in the next six to 18 months, according to Citigroup analysts.
Spot gold was trading at $2,383 per ounce Tuesday, a shade below its record high of $2,448 hit last Friday ahead of Iran’s missile attack on Israel.
“The recent gold rally has been aided by geopolitical heat and is coinciding with record equity index levels,” Citi wrote in a note Monday.
Gold, which retains its value as a hedge against inflation, has traditionally performed well in the face of economic uncertainty as investors look for more stable assets.
Since the start of this year, gold prices have increased more than 15% year-to-date amid mounting tensions in the Middle East as well as the ongoing war between Russia and Ukraine.
The stubborn inflation plaguing the US has also propped up gold prices.
The US Labor Department reported this month that inflation once again rose more than expected, 3.5%, in March.
Though the figure throws doubt on the Federal Reserve’s interest rate timeline, rates are still widely expected to come down from their current range — between 5.25% and 5.5% — this fall.
Because gold prices traditionally have an inverse relationship with borrowing rates, the combination of forthcoming rate cuts and Iran’s April 13 attack is set to make gold a more appealing asset than fixed income assets like bonds, which are set to yield weaker returns than the precious metal in the coming weeks.
“We project $3,000/oz gold over the next 6-18m,” said Citi’s analysts led by Aakash Doshi, Citi’s North America head of commodities research, CNBC reported.
The bank is also now estimating that average gold prices in 2024 will reach $2,340 — though trading will “regularly test and breach” $2,500 in the second half, they wrote.
Citi also made a “massive 40% upward revision” in their 2025 average price prediction, to $2,875.
Gold’s so-called “price floor” has also moved higher, from roughly $1,000 to $2,000 per ounce, Citi added, per CNBC.
On Friday, Goldman Sachs revised upward its price target for the yellow metal from $2,300 per ounce to $2,700 by the end of the year, referring to the gold market as an “unshakeable bull market,” CNBC earlier reported.
Costco has been reaping the benefits of the recent gold rally, with Wells Fargo predicting that the members-only retailer is raking in as much as $200 million monthly in revenue from its one-ounce bullion bars alone.
If Wells Fargo’s estimates are correct, Costco’s gold-related earnings mark a rapid acceleration from the $100 million sold in one-ounce gold bars in its fiscal first quarter that ended in late 2023.
“Our work suggests there has been significant interest given COST’s aggressive pricing and high level of customer trust,” Edward Kelly, an equity analyst at Wells Fargo, said in a note to clients last week, according to CNBC.
Though Costco doesn’t disclose its price for the nearly pure 24-karat gold bars to nonmembers, it’s estimated that the wholesaler tacks on a 2% charge above the spot price, which as of Tuesday morning was around $2,389 an ounce.
