Gold’s been on a tear but a new Wall Street forecast says the record run is poised to stop.
Gold is trading close to all-time highs, in dollar terms but also when adjusted for inflation. With central banks accumulating and investors attracted by its hedging and safe-haven characteristics, demand has rarely been so robust.
Gold prices near all-time highs in real and nominal terms
Citi’s global commodity team, however, thinks this demand has peaked and the price will weaken materially by the second half of 2026. Its quarterly market outlook predicts the gold price dropping to the $2,500-$2,700 range at the end of next year.
Gold futures closed Monday at $3,396.40 an ounce, only 1% below its record high of $3,431.20 an ounce.
Citi’s team, led by global head Maximilian Layton, points out that 0.5% of world GDP is currently being spent on gold, the highest in fifty years.
While prices have been rising for two decades, the rally became supercharged during the pandemic owing to a multiplicity of factors: investors sought to hedge against fiat currency debasement and inflation, central banks sought to diversify reserves, trade-war worries boosted prices and even jewelry demand has risen as income grew in China and India.
Gold prices, once considered a function of mining margins, have decoupled from that metric, and high-cost gold miners now operate at 100% margins.
High-cost gold miners’ margins at record highs
Citi anticipates investment demand in gold abating in late 2025 and 2026 as the adverse headlines dominating the trading backdrop of 2025 so far subside. Specifically, Citi expects “to see the President Trump popularity and U.S. growth ‘put’ kicking in, especially as U.S. mid-terms come into focus.” Citi believes risk sentiment will improve when, as they see it, trade deals are signed and the One Big, Beautiful Bill Act is passed.
If some of gold’s ascent is attributable to the threat of rising long-term U.S. bond yields, then Citi does not foresee a bond vigilante moment and thinks this motivation is only temporary. Citi asserts, “the BBB delta is largely funded by tariff revenues”.
This constructive view on bond yields persuades Citi that the Fed, therefore, has plenty of scope to shift from a restrictive monetary policy to a more neutral bias, bolstering growth sentiment — in the U.S. and globally — and thereby reducing the safe-haven demand for gold.
The Citi team calculates every 100 basis points drop in interest rates mechanically lowers forward gold prices by $200 per ounce.