Citi Raises Gold Price Target to $3,500 Citing China Demand, Safe-Haven Inflows

Citi Research Upgrades Gold Price Outlook Amid Supply Tightness and Rising Demand

Citi Research has raised its short-term gold price target for the next three months to $3,500 per ounce, up from its previous forecast of $3,200. The upgrade is primarily driven by increasing gold purchases from Chinese insurers and strong safe-haven demand as global market conditions, particularly in the U.S., remain uncertain due to tariff risks and economic weakness.

According to Citi analysts, the gold market is experiencing a highly unusual physical deficit, necessitating higher prices to incentivize stockholders to sell in order to balance the market. The bank suggests that this supply-demand imbalance, coupled with rising demand from both investment and industrial sectors, will push gold prices upward.

Highlights

• Citi raises 0-3 month gold price target to $3,500 per ounce.

• Analysts cite rare physical deficit in the gold market.

• Forecast reflects a strong surge in demand from China and global economic uncertainty.

China’s Role in Gold Demand Surge

Citi highlights the role of Chinese demand in driving gold prices higher. The bank notes that emerging market central banks, including China, are significantly increasing their gold purchases. Specifically, China has allowed ten of its insurers to allocate up to 1% of their total assets to gold, which is projected to generate an additional annual demand of approximately 255 metric tons. This figure is equivalent to about a quarter of total global central bank gold buying.

The expansion in gold purchases by Chinese insurers adds to the overall momentum in gold demand, which has also been buoyed by investor appetite through exchange-traded funds (ETFs) and over-the-counter (OTC) markets. Concerns over global and U.S. growth have further fueled this demand, with investors seeking gold as a safe-haven asset.

Highlights

• China’s insurers now allowed to allocate up to 1% of assets to gold.

• Increased demand from central banks and insurers in emerging markets.

• Chinese gold demand could reach 255 metric tons annually, contributing significantly to global demand.

Global Gold Market and Price Forecast Adjustments

Citi has also raised its average gold price forecast for Q2 2025 to $3,250 per ounce, up from its previous estimate of $3,100. The bank attributes this adjustment to the tightening supply situation and rising demand, particularly from emerging markets and institutional buyers.

The gap between current forward gold prices and production costs is also cited as a key factor. The current price difference, around $2,000 per ounce, offers a favorable environment for producers to lock in strong future margins, especially with expectations of a weakening U.S. dollar and potential cuts in interest rates.

Highlights

• Citi raises Q2 2025 average gold price forecast to $3,250 per ounce.

• Tightened supply and rising demand are primary drivers for price adjustments.

• A favorable environment for producers with strong future margins expected.

Implications for Gold Import Quotas and Market Conditions

Citi also pointed to recent regulatory changes in China that are likely to boost gold imports. China has reopened its gold import arbitrage window following the announcement of new U.S. tariffs, and has approved additional gold import quotas. This is expected to increase the flow of gold into China, further tightening the global supply and potentially pushing prices higher.

With these developments, Citi’s analysts predict continued strong demand for gold, both as an investment and as a central bank reserve asset. Given the rare supply deficit and growing investment interest, the outlook for gold prices remains bullish over the next few months.

Highlights

• China reopens gold import arbitrage window after U.S. tariff announcements.

• Additional gold import quotas approved, boosting imports and market tightness.

• Expectation of continued strong demand for gold as an investment and central bank reserve.