Gold Support May Weaken Gradually
Citi recently analyzed that gold investment is currently supported by multiple geopolitical and economic risks, but about half of these risks may fade in the second half of this year.
Why Gold Prices Remain High
The elevated price of gold is mainly driven by concerns over U.S. government debt and uncertainties linked to AI development. These factors will continue to support gold prices in the short term.
- U.S. debt concerns persist
- AI-driven economic uncertainty
- Geopolitical tensions remain unresolved
Outlook for the Gold Market
While gold prices are currently elevated due to various risks, Citi believes many of these risks may not materialize by 2026 or may not have long-lasting effects.
As U.S. midterm elections approach, the Trump administration may push for 'American-style gold stability.' Meanwhile, the Ukraine-Russia conflict and Iran tensions may ease, reducing overall risk levels.
Impact of Fed Independence on Gold
Citi also noted that if Wash's nomination is approved, it would reaffirm the Fed's political independence, which could act as a medium-term headwind for gold prices.