Gold prices are poised to hit a historic $3,000 per ounce within the next three months, according to Citigroup Inc., as geopolitical tensions and trade concerns under President Donald Trump fuel investor demand for safe-haven assets.
A record outflow of gold from London vaults in January underscored the dramatic shifts in the bullion market, as traders sought to capitalize on higher U.S. prices and hedge against potential tariff risks, Bloomberg reported. The London Bullion Market Association (LBMA) reported a 4.9 million troy ounce decline in gold holdings—the largest drop since recordkeeping began in 2016. This translated to a $14 billion shift, reducing gold stocks in London by 1.7 percent compared to December levels.
London, the world’s largest gold trading hub, typically holds about $800 billion worth of bullion.
“The monthly decline in gold stocks reflects the well-documented market dynamics at present,” the LBMA said, according to Bloomberg. “Given the flow of metal from London to New York, a 151 tonne decline in stocks in January is unsurprising.”
Adding to the frenzy, the one-month lease rate for gold soared to its highest level in decades, while long withdrawal lines formed at the Bank of England’s vaults, leading to large discounts on London-stored gold. Silver also experienced its largest-ever outflow, mirroring gold’s shift to New York, driven by similar price premiums, Bloomberg reported.
Trump’s proposed tariffs on Canada and Mexico could impact the price and availability of precious metals like gold and silver. But, despite market speculation, the White House has yet to confirm whether tariffs on precious metals are coming. However, Citigroup analysts estimate a 20 percent probability that Trump could include gold in a 10 percent blanket tariff on all U.S. imports.
In response to these developments, Citigroup raised its three-month gold price target to $3,000 per ounce, up from its previous $2,800 forecast.
“”The gold bull market looks set to continue under Trump 2.0 with trade wars and geopolitical tensions reinforcing the reserve diversification/de-dollarization trend and supporting EM official sector gold demand, and with global growth concerns (tariff and cycle related) set to raise ETF and OTC investment demand,” Citi analysts wrote in a report.
