Investing.com -- Strategists at Citi and UBS hiked their gold price forecasts on Thursday, predicting that the bull market for the precious metal will continue.
UBS has lifted its 12-month gold forecast to $3,000 per ounce as the bullion’s price surpassed its long-standing prediction of $2,850 per ounce.
This surge in gold prices, reaching new all-time highs and trading at approximately $2,870 per ounce, is attributed to concerns over tariffs and a more hawkish Federal Reserve stance since mid-December.
“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,” UBS strategists led by Mark Haefele said in a note.
They anticipate that gold will maintain its upward momentum throughout the year, supported by an extended global rate-cutting cycle, persistent uncertainty, and strong demand from investors and central banks.
Citi has also adjusted its gold price outlook, upgrading its short-term target to $3,000 per ounce and increasing its average forecast for 2025 to $2,900 per ounce from $2,800.
The Wall Street firm cites the continuation of the gold bull market under the Trump administration, with trade wars, geopolitical concerns, and global growth concerns expected to drive demand from exchange-traded funds (ETFs) and over-the-counter (OTC) investments.
“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,” Citi’s note states.
The bank’s analysis suggests that, despite the possibility of a Russia/Ukraine peace deal and the unknown status of gold in potential broad tariffs, the metal's price is likely to remain robust.
Citi does not foresee gold being included in any blanket tariffs in the second quarter of 2025, as it is considered a financial asset and, in the case of US gold coins, legal tender. However, they acknowledge the risk of a spike in US premiums if initial communications about potential broad tariffs do not explicitly exempt gold, or if it is indeed subjected to such tariffs.
As of February 5, gold trading markets estimate approximately a 20% chance of President Trump including gold in a 10% blanket tariff on all US imports, which is significantly lower than the probabilities implied for other metals like copper, silver, and platinum.