Gold, which has risen like a rainbow this year, may usher in an inflection point. According to the Chase Trading Platform, the team led by Citigroup analyst Maximilian Layton predicted in its Commodity Outlook report that the gold price will slide below $3,000 per ounce in the coming quarters, marking the end of this record-breaking upward trend. The report clearly states that the price of gold has risen to nominal and real levels, decoupled from the marginal cost of
gold, and may be about to usher in the "final glory". Citigroup expects that the gold price will gradually decline after reaching its peak in the third quarter of this year (3100-3500 US dollars/ounce). It is expected that by the second half of 2026, the gold price will fall back to the US$2500-2700/ounce range, about 20-25% lower than the current forward price.
The shift in US policy will end the demand for safe-haven and drive the gold price to fall.
The report presupposes a total of three scenarios for gold price movements. In the benchmark scenario (probability 60%), the gold price will remain above $3,000 per ounce in the coming quarter and then gradually decline. The bullish scenario (20% probability) means that if tariff concerns, geopolitical tensions and stagflation risks intensify, the gold price may reach a new high again in the third quarter. The bearish scenario (with the same probability of 20%) means that once the tariff issue is quickly resolved, the gold price will decline in a sell-off manner. In the short term, gold is still expected to maintain a relatively high price level in the third quarter, mainly supported by strong investment demand. The report points out that the rise in gold prices is mainly driven by concerns about tariffs, Fed policy and geopolitical risks, rather than central bank purchases. In addition, the resilience of jewelry consumption also supports prices. The report data shows that the proportion of global gold expenditure in GDP has reached 0.5%, the highest level in the past half century, showing investors' strong preference for gold as a safe-haven asset. In the medium and long term, Citigroup believes that the core logic of the decline in gold prices lies in the decline in the demand for safe-haven. The report pointed out that in the fourth quarter, global growth confidence may improve slightly, especially after the US stimulus budget takes effect, risk-averse sentiment will weaken; as Trump's trade policies shift to moderation, the market's uncertainty premium will also decline accordingly. In addition, the Fed's expectation of a rate cut from a tightening policy to a neutral stance may further weaken the attractiveness of gold as an interest-free asset. The report shows that data in the past 55 years show that when investment demand declines, the gold price will fall accordingly, mainly because price adjustments will stimulate a decrease in jewelry consumption and at the same time encourage inventory holders to sell.
Industrial metals are bullish in the medium term.
In sharp contrast to gold, despite the short-term pressure of tariffs and weak demand, Citigroup still remains structurally bullish on the medium-term prospects of industrial metals. The aluminum market is particularly favored by Citigroup. The report emphasizes that aluminum is a "future-oriented" metal, limited by energy intensity on the supply side, while the demand side is strongly driven by the processes of artificial intelligence data centers, humanoid robots and decarbonization. Citigroup predicts that, at the current price level, there will be a shortage of aluminum supply in the next five years, and it needs the price to rise to more than $3,000 per ton to stimulate sufficient supply growth.