Gold rebounds fiercely! Citi calls for $6,000, but faces pressure in 2026.

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After a brief round of correction, gold is rapidly recouping lost ground. Currently, gold prices have broken through the $4,100 resistance level and are testing the $4,200 mark.

Although gold prices have rebounded about $300 from recent lows, a key momentum indicator—the Relative Strength Index (RSI)—shows it has not yet entered a seriously overbought region, suggesting that upward momentum may not be exhausted.

According to Windchase Trading Desk, Citi released its latest gold outlook report on November 10, predicting that under certain scenarios, gold prices could have the potential to reach $6,000.

Its analysts stated that in a bull market scenario with a 30% probability, gold prices could reach $6,000/oz by the end of 2027. This forecast is based on a massive global wealth redistribution, and the relatively small physical gold market would not be able to accommodate it, balancing only through a surge in prices.

Citi believes that U.S. investors are the main driving force for this round of gold's rise. Data shows that since 2025, net inflows into U.S. gold ETFs accounted for 60.9% of the global total.

However, the core view of this report is more cautious. Citi considers a “slow decline” in gold prices in 2026 as its base case scenario, giving it the highest probability of 50%. The forecast expects that as the U.S. economic environment improves, gold prices will fall back to $3,650/oz by then.

$6,000/oz? A “bull market scenario” driven by wealth transfer

One striking viewpoint in Citi's report is the possibility of gold reaching $6,000/oz. According to the report, this is not its base case forecast, but a “bull market scenario” that could occur under specific conditions with about a 30% probability.

The core driving force of this scenario is global wealth reallocation. The report notes that the physical gold market is too small to absorb such large-scale wealth transfer.

The report estimates that gold accounts for about 3.5% of current global household wealth, and if this allocation rises by just 1.5 percentage points to 5.0%, the additional gold demand would be equivalent to 18 years of global gold mine output.

"Clearly, the wealth transfer cannot be satisfied by (supply), so the price needs to play its role."

Under limited supply, such huge demand can only be met through a sharp price increase, which could push gold prices to around $6,000/oz.

In this scenario, Citi predicts gold would reach $5,000/oz by the end of 2026, and $6,000/oz by the end of 2027.

Base case: Gold may “slowly decline” to $3,650/oz in 2026

Although the $6,000 target price is attention-grabbing, Citi analysts make it clear in the report that this is not their base case. On the contrary, they believe gold is more likely to weaken in 2026, with a 50% probability.

The report believes that gold in 2026 will experience a “grind lower.” The main reason for their cautious outlook on 2026 is that the U.S. economic cycle will enter a “Goldilocks” phase that year.

It is expected that by then, trade deals by the Trump administration may lead to lower tariffs, capital expenditure and a stronger stock market will drive U.S. economic growth, inflation risks will ease, and concerns over Fed independence will subside. In this environment, market risk appetite will recover, favoring risk assets such as industrial metals and stocks, while gold’s safe-haven appeal will decline.

A key trigger will be a turn (rise) in U.S. economic sentiment and a decline in real interest rates.

Citi has thus set a target price of $3,650/oz for gold in 2026. Additionally, the report sets a 20% probability for a bear market scenario, where, if geopolitical, fiscal, and cyclical concerns significantly abate, gold could fall back to $3,000/oz by the end of 2026 or 2027.

Valuation warning: Multiple indicators at their highest in 50 years

For investors, a key risk is gold's current valuation. Citi’s report points out through multi-dimensional analysis that gold is “very expensive.”

• Detached from production costs: Gold prices are now far above marginal production costs. High-cost gold miners are seeing profit margins at the highest levels in nearly half a century, even surpassing those during the second oil crisis in 1980.
• Record share of expenditures: At a price of $4,000/oz, global gold expenditure as a share of GDP exceeds 0.55%—the highest in 55 years.

• Household asset allocation at a new high: The value of gold bars, coins, and jewelry held by households globally as a proportion of their net wealth has risen to about 3.5%, a historic peak.
• High proportion of central bank reserves: As gold rises, it makes up nearly 35% of global foreign exchange reserves—a high not seen since the mid-1990s.

Who is buying? U.S. investors are the main drivers of the recent rally

Citi’s analysis shows that since 2025 gold prices soared from $2,600/oz to $4,000/oz, the main driver was not the much-watched central bank gold buying, but investment demand apart from central banks.

Calculated at 2025 dollar value, this net investment demand is running at an annualized pace exceeding $350 billion, a record high.

Breaking down the data further, U.S. investors are the main force in this rally. According to the report, since 2025, net inflows into U.S. gold ETFs account for 60.9% of the global total.

Citi sees this strong investment demand as largely reflecting investors hedging against the risk of U.S. economic slowdown due to high interest rates and tariff policies.

Market imbalance: The huge physical "gap" supports prices

From the supply and demand fundamentals, Citi estimates that the current physical gold market is experiencing a huge “gap,” possibly over 1,000 tons per year. More precisely, this “gap” represents a strong “call on stockholders” for existing holders to sell.

In other words, new purchasing demand far exceeds supply from mine output and recycled gold, so sales from existing stockholders are necessary to balance the market. As long as these stockholders (whose buying motives are similar to new buyers, such as geopolitical and sovereign debt concerns) choose to hold, the market remains tight and prices can continue to climb, until new buyers stop or holders are willing to sell.

However, the report also reminds us that at the high price of $4,000/oz, falling jewelry demand and increased recycled gold supply may ease this imbalance to some extent.

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The above content is from Windchase Trading Desk.

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Risk Notice and DisclaimerThe market has risks, investment needs caution. This article does not constitute personal investment advice, nor does it consider users' specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are appropriate to their facts. Investing based on this article is at your own risk. ```