Citi, Motilal Oswal and a research unit of Fitch Ratings – BMI – are among those suggesting an end to the gold rally, as global macroeconomic conditions that had hitherto burnished its safe-haven allure change to bullion’s relative disadvantage.
Citi predicts gold’s possible return to $2500 to $2700 an ounce by the second half of 2026, while Motilal says annual gains beyond 32% are rare. The Fitch unit says downside pressures are building up, pushing gold prices down, although a return to pre-Covid price levels are unlikely.
“Despite our outlook for gold prices to weaken, we do not see a return to pre-Covid levels,” said the Fitch unit. “Gold prices will average USD2,720/oz during 2025-2029, compared with USD1,393/oz in 2019.”
Gold prices, expressed in US dollars per troy ounce, have risen 86% to $3,342 since January 2022. The Ukraine-Russia war, troubles in the Middle East, and persistent central bank purchases have underpinned gold’s surge.
The yellow metal, the traditional store of value for the average Indian, was at $ 1797 per troy ounce on January 31, 2022. While giving an outlook over a long-term horizon, BMI said as the July 9 deadline for the tariff pause nears, prices could rise if the trade environment becomes too restrictive, inviting reprisals.Citi forecast a sharp dip in the gold prices from the current levels. According to a Bloomberg report, Max Layton, analyst at Citi, has stated that the slump in gold prices may be driven by weaker investment demand, improving global growth prospects, and rate cuts by the Federal Reserve. Motilal Oswal said in a report that gold prices would consolidate or could move sideways, with signs of market fatigue.
It also added that historical data suggests that annual gains beyond 32% are rare, reinforcing the case for caution at current levels. Factors to watch in the near-term are the Federal rate cuts, inflation and the US dollar strength. Rate cuts may lower bond yields, shifting investments toward non-yielding yet safehaven assets like gold, according to BMI. To be sure, investors are expected to seek further refuge in the asset if significant escalation is seen in any of the ongoing conflicts. In contrast, if the Federal Reserve abstains from cutting rates, a sharp rise in the US dollar and bond yields could lower gold’s appeal, bringing prices back to $2500/oz, BMI said. ICICI Bank said in a report mid-May that gold prices could be between $3300 and $3500 per ounce by December. A potential backloaded easing cycle by the Federal Reserve may lead to falling real yields, pushing demand for physical assets like gold, it had said.
