(Mike Maharrey, Money Metals News Service) As gold continues to surge, two big banks have raised their gold price forecasts to $3,000, citing the threat of trade wars and geopolitical uncertainty.
Citigroup analysts now expect gold to top $3,000 in the next three months, up from their previous $2,800 forecast. The bank also raised its average 2025 price forecast to $2,900.
“The gold bull market looks set to continue under Trump 2.0 with trade wars and geopolitical tensions reinforcing the reserve diversification/de-dollarization trend and supporting emerging market (EM) official sector gold demand.”
Citigroup analysts remain bullish on gold despite dollar strength. They said a strong greenback will incentivize central banks to hold more gold to support their own currencies.
Official central bank gold buying topped 1,000 tonnes for the third straight year in 2024, driven primarily by emerging market banks. The World Gold Council said that despite 15 straight years of increasing global gold reserves, “their hunger for gold shows no sign of being quelled.”
“Geopolitical and economic uncertainty remains high in 2025, and it seems as likely as ever that central banks will once again turn to gold as a stable strategic asset.”
As for tariffs, Citi analysts do not expect gold or silver to be included in any blanket tariffs at least through the first half of the year, but they acknowledged the risk of a spike in U.S. premiums if the metals aren’t explicitly exempted in communications about broad-based tariffs.
Citi analysts say a clear resolution to the tariff issue and an easing of geopolitical tensions could create some buying opportunities.
“A Russia/Ukraine peace deal, and confirmation of whether gold would be exempt from broad tariffs (or not), could provide a buying opportunity over the next 2-3 months.”
Swiss Bank UBS also raised its gold price forecast to $3,000. The spot price has already eclipsed its initial forecast of $2,850.
“While we acknowledge the current spot price of $2,870/oz is above our fair-value estimate, gold’s enduring appeal as a store of value and hedge against uncertainty has again proven itself.”
Despite some a pause in rate hikes by the Federal Reserve, UBS analysts expect “extended” monetary easing by central banks to support gold this year.
Given the market dynamics, these big bank analysts might actually be understating the strength of the bulls. As analyst Brien Lundin put it, “Gold seemingly ‘wants’ to go higher.”
“A powerful sign of a bull market is when seemingly bearish news or data is instead interpreted bullishly by investors. As I’ve said numerous times over the years, and particularly over the course of this one-year-old gold rally, it’s instances like these when gold seemingly ‘wants’ to go higher. That’s just where we are now — at a time when even a strong dollar or rising Treasury yields can’t deter gold’s upward trajectory.”
There may also be some factors the mainstream analysts are missing. For instance, UBS and Citigroup analysts did not focus on inflation expectations in their analysis, but this could be another phenomenon driving gold higher. In the U.S., CPI has nudged upward for three straight months.
U.S. consumers’ 12-month inflation expectations jumped to 4.3 percent in February, the highest level since November 2023, according to the University of Michigan’s monthly consumer sentiment survey. Analyst Jesse Colombo pointed out that the 1.7 percentage point surge over the past three months is the sharpest increase in inflation expectations since February 2020.
Meanwhile, the Fed has eased its monetary policy.
We’re already seeing inflationary pressure manifest in the increasing money supply.
The M2 money supply bottomed a little over a year ago at $20.60 trillion. Since then, it has crept upward. As of December, it was at 21.5 trillion. That’s the highest level since October 2022.
The money supply rose by 0.4 percent in December alone. This represents an annual monetary inflation rate of nearly 5 percent.
This is – by definition – inflation.
And it underscores an important point: the Fed never did enough to slay the inflation dragon.
Also, consider that these mainstream analysts aren’t factoring in any kind of economic chaos, which is entirely possible given the Catch-22 facing the Federal Reserve’s monetary policy.
And yet, despite not factoring in these dynamics, there is still growing bullishness for gold in the mainstream.
Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
