Citi lifted its 0-3 month gold price target to $4,800 per ounce on Monday, while keeping its 6-12 month projection unchanged at $5,000 per ounce. The bank believes bullion still has room to extend its rally.
Spot gold carried momentum from last week into early trading this week, surging toward the $4,700 level during Tuesday's Asian session before pulling back to around $4,640, signaling a quick correction phase. Both precious metals have delivered stellar performance this month, with combined market capitalization adding nearly $5 trillion in September alone, according to Bull Theory analysis. Still, prices remain below the record highs set earlier this year.
Citi attributes the ongoing gold rally to multiple supporting factors, including Middle East geopolitical tensions, expectations of lower real interest rates, and the anticipated shift in Federal Reserve monetary policy. The bank noted that as tensions around the Strait of Hormuz gradually ease, real rates continue to decline, and the Fed's hawkish stance softens, gold retains a solid foundation for further gains in the coming months.
The recent breakout has also been fueled by shifts in market liquidity. After the U.S. Treasury expanded its long-dated bond buyback program, investors grew more confident that upward pressure on long-term rates would ease, prompting increased allocation toward precious metals and driving stronger buying momentum in gold. Meanwhile, persistent Middle East instability has reinforced gold's safe-haven appeal, with rising energy prices further amplifying demand for defensive assets amid shifting risk sentiment.
JPMorgan also maintains a constructive outlook on the gold market but cautions that short-term direction hinges on macro data and Fed policy signals. Given the high uncertainty surrounding Middle East developments and recent tariff-related headlines lifting risk premiums, the bank views investors' hesitation to reposition as normal. The market now focuses on two key events: Wednesday's U.S. PCE inflation reading and Friday's remarks from Fed officials at the Jackson Hole symposium.
JPMorgan emphasized the importance of the PCE report, with its research team anticipating the data could reflect elevated inflation levels, while markets have yet to fully rule out a Fed rate adjustment in September. If inflation comes in hotter than expected, markets may reassess the pace of rate cuts, potentially driving gold down to test its 200-day moving average. Conversely, if inflation undershoots forecasts and markets haven't fully digested Jackson Hole signals, gold could rapidly accelerate toward the $5,000 per ounce mark.
The bank also reminded investors that gold surged roughly $1,100 within a single month back in January, underscoring that sharp, fast-moving swings remain possible under current market conditions. In the near term, JPMorgan expects gold to trade within a $4,500 to $5,000 per ounce range, with the eventual breakout direction dependent on inflation data, Fed commentary, and geopolitical risk developments.
Beyond short-term macro factors, sustained central bank buying continues to serve as a key long-term support for the gold market. Despite earlier concerns that central bank purchase momentum might slow, recent data indicates the global trend of rising official gold reserves remains intact.
The U.S. dollar's trajectory also plays a pivotal role in gold's performance. Cooling U.S. inflation, softening employment figures, and growing expectations of a Fed policy pivot have all weighed on the greenback, and a weaker dollar typically benefits dollar-denominated gold prices.
On the technical front, several institutions believe gold has reclaimed its 200-day moving average, suggesting that prior downside pressure has eased. Even if certain economic indicators disappoint, gold's upward momentum remains largely intact, keeping the overall market tone robust.
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