Citi analysts predict potential surges in gold and oil prices. Gold could hit $3,000 per ounce and oil $100 per barrel within the next 18 months, but these predictions depend on specific, unidentified market triggers.
Gold, currently at $2,016 per ounce, might jump 50% due to three potential market shifts: aggressive central bank buying, stagflation (high inflation + low growth), or a severe global recession, according to Citi analyst Aakash Doshi.
Citi analysts predict a potential path for gold to reach $3,000. They see a “wildcard” scenario where emerging markets increasingly abandon the U.S. dollar, causing a domino effect that drives up gold demand from central banks. This could overshadow the current gold demand for jewelry.
Central banks worldwide are buying gold at a record pace, seeking to diversify their reserves and mitigate credit risk, according to Citi. China and Russia lead the charge, followed by India, Turkey, and Brazil. This trend, combined with sustained purchases exceeding 1,000 tons for two years, could significantly impact gold prices, as Citi analyst Aakash Doshi suggests.
Oil at $100
Beyond gold, Citi analysts also envision a “wildcard” scenario for oil prices to reach $100 per barrel. This hinges on three factors: increasing geopolitical tensions, deeper production cuts by OPEC+, and supply disruptions in key oil-producing regions, as per Aakash Doshi. While the recent Israel-Hamas conflict hasn’t impacted production yet, Houthi attacks in Yemen remain a concern, and further escalation could affect larger OPEC+ suppliers in the region, according to Citi.
Tensions simmer on the Israel-Lebanon border, raising concerns of a wider regional conflict that could impact oil production. Citi analyst Aakash Doshi highlights Iraq, Iran, Libya, Nigeria, and Venezuela as vulnerable to disruptions, potentially exacerbated by stricter U.S. sanctions on Iran and Venezuela. Additionally, Citi analysts acknowledge the geopolitical risk of Russian oil supplies being impacted by Ukrainian drone attacks on refineries. However, their base case prediction for oil remains around $75 per barrel for the year. Current market prices on April 20, 2024, reflect some of these anxieties, with Brent at $83.56 and WTI at $79.13 per barrel.
