Gold prices: Citi forecasts yellow metal to touch $3,000 an ounce in 6-18 months; check today's rates

Gold prices, which have been rallying sharply since the start of this year, will peak to $3,000 an ounce in the next six to 18 months, according to a forecast released by Citi Research. The estimate comes at a time when gold is near to all-time highs, in the backdrop of escalating tensions in the Middle East.

The spot gold price peaked to the highest-ever at $2,431.53 an ounce on April 12, as the demand for safe-haven assets shot up in view of Iran planning a military strike on its arch-rival Israel.

The tensions relatively subsided on April 15, as the Iranian strikes over the weekend did not result in any fatalities, and caused only a modest damage. Tehran also issued a statement, noting that it has avenged the Israeli assault on its Damascus consulate and does not want to escalate the conflict further.

However, the gold rally is not only fueled by the geopolitical turmoil. The gold buying spree among central banks around the world, most notably China; and the projection of interest rate cuts by the US Federal Reserve later this year, have added to the surge.

What the Citi forecast says

While Citi has predicted gold to hit the $3,000 an ounce mark in the period of six to 18 months, it sees the baseline at $2,350 per ounce in 2024. This is higher by 6.8% as compared to its previous forecast.

For 2025, the research firm has increased the baseline to $2,875 per ounce, marking an upward revision of 40%. It further anticipates gold testing and surpassing the $2,500 mark several times in this calendar year.

Notably, spot gold prices have rallied by around 20% in the global market in the last one-year period.

What are the gold rates today?

Spot gold prices, in the international market, were hovering around $2,378 an ounce on Tuesday, April 16. This is lower by around 0.25% as against the previous day’s close.

In India, gold was trading higher at the Multi Commodity Exchange (MCX). At 12:02 pm, it was valued at ₹72,900 per 10 gram, higher by 0.62% as against the previous day’s close.

In the retail markets, 24k gold (99.9%) was inching closer to the ₹75,000 per 10 gram mark. In New Delhi, the price stood at ₹74,805 at the end of market hours on April 15. The price stood at Rs ₹74,785 in Mumbai, ₹74,860 in Chennai and ₹74,950 in Kolkata.

Why are gold prices going up?

• Fed outlook: The US central bank, in its policy review meeting held last month, kept the benchmark rates unchanged in the range of 5.25%-5.5% but projected three likely rate cuts of 25 basis points (bps) each in calendar year 2024. A lower interest rate would translate into the release of higher liquidity in the economy, which in turn would further aid the gold prices, analysts said. The projection of reduced interest rates has boosted the gold buying sentiment among those looking at the yellow metal as medium to long-term investment, analysts added.

• Chinese demand: China, which is still recovering from the Covid-19 jolt to its economy, has seen a spike in gold purchases by its citizens, as well as the country’s central bank. The People’s Bank of China bought gold for the 16th consecutive month in February. It added around 390,000 troy ounces of the metal during the month, taking its overall holding to 72.58 million troy ounces. With the Fed and other central banks projecting rate cuts in the near future, gold is considered as a safer bet to support foreign reserves, economists explain.

• Geopolitical risks: The ongoing Russia-Ukraine conflict and the escalating tensions in the Middle East, where Israel and Iran are feared to collide amid the ongoing Gaza war, have also boosted the gold prices, analysts said. The reason, they explain, is that gold is traditionally seen as a safe investment instrument in a jittery global market and acts as a hedge against inflation that may be stoked if the global supply chain is disrupted.