The blistering rally in gold may soon lose steam, with Citigroup Inc. forecasting the precious metal will fall back below US$3,000 an ounce in the coming quarters.

In a note led by analyst Max Layton, Citi projected that gold prices could retreat to between US$2,500 and US$2,700 an ounce by the second half of 2026. The bank cited expectations of weaker investment demand, improved global economic growth, and a shift in U.S. Federal Reserve policy toward rate cuts.

Gold has surged more than 30% this year, hitting a record high in April. The rally was fueled by safe-haven buying amid geopolitical tensions in the Middle East and uncertainty surrounding former U.S. President Donald Trump’s trade policies. Persistent U.S. deficit concerns and robust central bank gold purchases have also supported the metal.

However, Citi analysts believe investment demand could start tapering off from Q4 2025 as market confidence stabilizes with the rollout of a stimulatory U.S. budget and easing concerns over Trump’s policies. “We see a lot of scope for the Fed to cut from restrictive policy to neutral,” the report stated.

In Citi’s base-case scenario — assigned a 60% probability — gold will consolidate above US$3,000 in the short term before heading lower. The bank’s bull case (20% odds) suggests gold could hit a new record in Q3 on renewed fears over tariffs, geopolitical risk, or stagflation. A bear case, also at 20%, envisions a sharp pullback if trade tensions ease quickly.

Spot gold was last seen trading around US$3,393 an ounce, fluctuating after Trump called for an evacuation of Tehran and left the G7 summit early amid escalating tensions between Israel and Iran.

Elsewhere in commodities, Citi is turning bullish on aluminum and copper. Analysts highlighted aluminum’s sensitivity to a rebound in global growth and sentiment, while also reaffirming a strong outlook for copper.

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