Citi: Gold Valuation Peaks as Safe-Haven Demand Poses Major Threat

Gold Valuation Hits Extreme Levels

A recent report from Citi highlights that global gold spending as a percentage of GDP has surged to 0.7%, the highest level in 55 years, indicating that gold valuation has entered an extreme zone. This level significantly exceeds historical norms, suggesting potential overexposure in the market.

Potential for Sharp Correction

If gold allocation returns to the historical average of 0.35%-0.4%, prices could face a significant correction, with the potential for a 50% decline.

• Gold spending as % of GDP: 0.7% (55-year high)
• Historical average range: 0.35%-0.4%
• Potential price drop: up to 50%

Safe-Haven Demand May Fade

Citi believes that the second half of 2026 could mark a turning point for the gold market. With the Russia-Ukraine conflict expected to ease, the U.S. economy strengthening, and the Fed's independence becoming more certain, safe-haven demand could diminish, posing the biggest downside risk for gold prices.