Gold is set to reach US$3,000 an ounce over the next six to 18 months on increasing investor inflows amid expectations that the Federal Reserve will eventually cut interest rates, Citigroup Inc said, adding to a roll call of Wall Street banks that have raised forecasts.

Analysts led by Aakash Doshi upgraded their estimate for average prices in 2024 to US$2,350 and made a “massive 40% upward revision” in their 2025 prediction to US$2,875. Trading will “regularly test and breach” US$2,500 in the second half, they wrote. Gold traded at US$2,387 by 1pm Singapore time (same Malaysia time) on April 16.

Bullion has been on a tear, driven by wars in the Middle East and Ukraine, buying by central banks and consumer demand in China. Goldman Sachs Group Inc says the precious metal’s in an “unshakable bull market” and has raised its year-end forecast to US$2,700. UBS Group AG sees US$2,500 by year-end.

According to Citigroup, gold will be driven by increased flows from managed money players, who are already showing signs of catching up with demand from physical consumers in China and central banks. The start of a Fed cutting cycle - or a potential recession scenario - into 2025 will provide further impetus for investment demand.

Inflows into gold-backed exchange-traded funds - largely absent in recent years - will “buffer the path to US$3,000,” the analysts wrote. Citi sees increased prospects for a pullback in prices around May or June but expects “strong buying support” at the US$2,200 an ounce threshold.

  - Bloomberg