In a surprising reversal that has sent ripples through commodities markets, Citigroup Inc. has abandoned its longstanding bearish stance on gold, now forecasting a surge to record highs driven by mounting concerns over U.S. economic slowdown and inflationary pressures from potential tariffs. Analysts at the bank, who just months ago predicted prices dipping below $3,000 per ounce by late 2025, have pivoted sharply, citing a deteriorating near-term outlook for American growth amid geopolitical tensions and policy uncertainties.

This shift comes as gold prices have already climbed to unprecedented levels this year, fueled by safe-haven demand and central bank purchases. According to a report from Bloomberg, Citi now expects bullion to trade in a range of $3,300 to $3,600 per ounce over the next three months, with a base-case target of $3,500—up from a prior estimate of $3,300. The bank’s strategists point to “U.S. growth and tariff-related inflation concerns” remaining elevated through the second half of 2025, potentially weakening the dollar and bolstering gold’s appeal.

The Bearish Past and the Bullish Flip

Citi’s earlier pessimism, detailed in a June note covered by Reuters, hinged on expectations of declining investment demand and an improving global economy. At that time, the bank foresaw gold prices retreating amid optimism for rate cuts and stronger growth, projecting a drop below $3,000 by early 2026. But recent economic data, including softening job numbers and manufacturing indicators, have upended that narrative, prompting this about-face.

Industry insiders note that Citi’s revision aligns with broader market anxieties, particularly around U.S. trade policies. Posts on X (formerly Twitter) from market watchers like unusual_whales highlight how trade wars and de-dollarization trends under potential political shifts could sustain gold’s rally, with some users echoing Citi’s updated short-term target of $3,000 per ounce earlier this year, now escalated further.

The bank’s analysts argue that inflation-boosting tariffs, possibly amplified by election-year rhetoric, could exacerbate price pressures while a faltering U.S. economy drives investors toward gold as a hedge. This view is supported by Invezz, which reports Citi’s expectation of sustained investment demand amid these headwinds, potentially pushing prices moderately higher alongside a softer dollar.

Economic Underpinnings and Market Implications

Delving deeper, Citi’s outlook ties into weakening U.S. indicators, such as recent payroll misses and rising unemployment claims, which have stoked recession fears. The bank’s wealth management arm, in its 2025 outlook published on Citi Wealth, describes a “rule-breaking” expansion fraught with discord, where growth persists but amid inflationary risks— a perfect storm for gold bulls.

For commodities traders, this pivot underscores gold’s role as an inflation barometer. Historical precedents, like the tariff-driven spikes during the late 2010s, suggest prices could overshoot if policies materialize. As noted in coverage from VT Markets, Citi anticipates strong physical demand from central banks in emerging markets, further insulating gold from downside risks.

Yet, not all signals are uniformly bullish. Some X posts from figures like Peter Schiff warn of sticky inflation potentially delaying Federal Reserve rate cuts, which could initially pressure gold before a surge. Citi itself tempers enthusiasm, forecasting a possible peak in the third quarter of 2025 followed by moderation if global growth stabilizes.

Strategic Shifts for Investors

For institutional players, Citi’s reversal prompts portfolio reallocations. Hedge funds, already net long on gold futures, may amplify positions, per data from the Commodity Futures Trading Commission. The bank’s note, as relayed by EconoTimes, emphasizes tariff-related inflation as a key driver, projecting U.S. policies could add upward pressure on consumer prices, enhancing gold’s luster.

Looking ahead, analysts see this as part of a broader commodities supercycle, with gold benefiting from diversification away from fiat currencies. While risks like a sudden economic rebound could cap gains, the consensus among sources like investingLive leans toward Citi’s upgraded $3,500 target as a baseline for near-term trading strategies.

In essence, Citi’s bullish turn reflects a market attuned to fragility in the world’s largest economy, positioning gold not just as a safe haven but as a strategic asset in an era of uncertainty. As one X post from Bloomberg succinctly captured, this revision marks a pivotal moment for bullion’s trajectory into 2025.