New forecast for gold: Demand is rising
Citi Research has revised its gold price forecast upward, citing increased interest from Chinese insurance companies and growing global economic uncertainty.
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In a notable report for gold investors, Citi Research has revised its three-month outlook for the price of gold per ounce upward. The firm projects that a rise from the current level of 3,200 dollars to 3,500 dollars is possible. This optimistic forecast highlights the impact of gold demand from Chinese insurance companies and the fragility of global markets.
STRONG DEMAND FOR GOLD
In its investor note, Citi stated that the Chinese government has authorized 10 insurance companies to allocate up to 1 percent of their total assets to gold investments. It was noted that this decision is expected to lead to a significant increase in demand in the gold market.
The report recorded that this regulation could create an additional demand of approximately 255 tons. This amount is equivalent to one-quarter of the average annual gold purchases by global central banks.
INTEREST HAS INCREASED
In its report, Citi also stated that investors are tending toward risk aversion due to growing global concerns over customs duties, recession risks, and a weak economic outlook. In this context, it was emphasized that demand for gold, which is seen as a safe haven, has strengthened further.
While gold's function as a hedge against inflation makes it a preferred investment vehicle during global crises, it is stated that the interest of institutional investors, particularly those based in Asia, could shift the balance in the market.
According to Citi's updated projection, the price of gold per ounce could test 3,500 dollars over the next 3 months.