International financial institutions predicted gold prices to surge, could reach $3,000

International financial institutions, including US Citibank and Bank of America, are forecasting a significant rise in gold prices, predicting that the price of gold could reach $3,000.

Bank of America predicts that gold prices may climb to $3,000 within the next 12 to 18 months, driven by interest rate cuts and growing debt uncertainty.

Citigroup anticipates an average gold price of $2,350 per ounce in 2024, followed by a sharp increase of 40% to $2,875 in 2025.

Both Bank of America and Citibank attribute the potential rise in gold prices to several key factors:

1. Rising Demand for Investment Purposes

Michael Widmer, a commodity strategist at Bank of America, highlights that the future of gold largely depends on increased investment demand. The anticipation of a US interest rate cut has fueled this demand. Notably, investor inflows into gold investment funds were positive for the first time in 12 months, totaling 3,087.9 tonnes in May. Widmer also noted that the US bond market could face further shocks as the US budget deficit continues to grow.

2. Central Bank Purchases

The report from Bank of America points to the continued support from central banks in buying gold as a significant factor in bolstering gold prices. Last year, central banks added 1,037 tonnes of gold to their reserves, just slightly down from 1,082 tonnes in 2022, according to the World Gold Council. Citigroup also notes strong gold demand from central banks, especially those in emerging countries.

3. US Federal Reserve Interest Rate Cuts

While predictions about US bank interest rates fluctuate with each new inflation report, economic pressures suggest that the US Federal Reserve may cut interest rates soon. Citibank expects the US economy to slow by the end of the second half of this year, with declining US bond yields contributing to higher gold prices.

As these factors continue to influence the market, the forecasted rise in gold prices could have significant implications for investors and economies worldwide.