According to Citi analysts, physical gold demand may have softened in the second quarter compared to the first, but it is still on a positive trend for 2024. The Wall Street giant predicts that spot trading could reach a record average price range of $2,400-$2,600 per ounce in the second half of the year as financial investors catch up.
Non-monetary gold imports into China decreased in the second quarter, but Citi projects a record 1,750 tons of onshore bullion imports in 2024. This would represent a significant increase from the pandemic levels of 2020 and could account for 47% of world gold mine output.
Official sector gold demand has stabilized at a record level since 2022 and could increase further towards 35% due to trade wars and US fiscal policy concerns. Citi also predicts a record amount of central bank gold buying in 2024, with the potential for even higher numbers in a bullish scenario.
Additionally, inflows into gold exchange-traded funds (ETFs) are expected to improve in the second half of the year as the Federal Reserve cuts rates. Citi remains optimistic about gold's physical uptake in the next 12 months, with a potential Fed cutting cycle and US labor market challenges boosting paper demand for the precious metal.
The analysts at Citi have set a base case price target for gold at $2,800-$3,000 per ounce by mid-2025, representing a 10-20% increase from current levels.
Analysis: The article highlights Citi's bullish outlook on gold prices and demand, with predictions of record prices and increased consumption. This could have significant implications for investors, as higher gold prices could lead to increased returns for those holding the precious metal. Additionally, the projected increase in central bank gold buying and ETF inflows could further drive up prices. For individuals looking to diversify their investment portfolio or hedge against economic uncertainties, considering gold as part of their strategy could be beneficial.