**Deep Dive: Bullion Bank Says "We see gold prices rising to well over $3,300/oz"
A fresh view on Gold's demand outlook
Housekeeping: Good Morning
Contents (1890 words, 19 charts)
Backdrop: Citi Joins Team $3,000++
Why This Report is Important: More Upside is Coming
Bottom Line: Target Raised
The Bank’s 4 Main Reasons (Fresh insights here)
Trump 2.0 Accelerates and Broadens Dedollarization
Investor Demand Will Surge on Geopol Risk and US Economic Slowdown
Conclusion: What’s New Here
Backdrop: Bank Joins Team $3,000++
This is a very special report as it lays out why things will likely continue for 4 years onward. There is evidence on multiple fronts of spreading physical demand as new realities settle in for other nations and for US investors
CITI’s new Gold report titled Why gold’s bull market is based on physical fundamentals and is set to continue published February 6th makes a straightforward case: Gold’s rally is being driven by physical demand, not speculation. The bank has hinted at this before in August 2024. It was also about this time other major Bullion Banks unveiled their own new physical demand-skewed models for valuing Gold.
MidYear 2024, CITI along with several other Banks like: MUFG, GS, BOA, and UBS all revealed “new” ways to model gold prices within weeks of each other. Their reports were especially important as all indicated a dismissal of the old Dollar/Rates correlations as primary drivers of Gold price. Goldman said it best: “While the gold-price-to-rates relationship remains intact in changes, the ‘secret’ buyer has elevated prices and reset the relationship in absolute levels”1
Stated another way, this bank was saying Gold is readjusting its correlation against western rates. Here is GoldFix concluding something similar 18 months prior. From Dollar Correlations Are Not Broken, Just Resetting:
Gold hasn’t decoupled from yields and the dollar, but the beta has decreased. While a gap has opened up, this does not mean the relationship has broken down.
This change in risk metrics was significant as it acknowledged China/BRICS demand and set the table for price target upgrades regardless of the what the Dollar or rates did. And that is exactly what we got.
Why This Report is Important: More Upside is Coming
As of two days ago, with Citi (and UBS) raising their targets, every bank listed above has raised its price target to $3,000 now. Two of them, BOA (and today) Citi have raised their soft targets even higher2