Gold Price Outlook: A Temporary Peak?

After falling more than 1% on Monday, ending a three-day winning streak, gold prices continued their downward trend on Tuesday.

On Tuesday, U.S. President Trump and British Prime Minister Starmer signed the U.S.-UK trade agreement at the G7 summit. As the United States and China, and the United Kingdom have successively signed preliminary agreements, tensions in trade disputes are fading, which has become an important factor in the decline in gold prices.

However, the conflict between Iran and Israel has attracted some buyers to the safe-haven precious metal. Currently, gold prices are consolidating around $3,400 amid the uncertainty in the Middle East.

So, in the medium and long term, is the price of gold bullish or bearish?

In their latest report, Citi analysts led by Max Layton expressed their view that gold prices may have peaked and are expected to fall back in the third quarter of 2025.

Citi elaborated on several possible scenarios in its report.

Citi's base case scenario (60% probability) predicts consolidation in the $3,100-$3,500 per troy ounce range next quarter, followed by a further decline by the end of the year and into 2026. It will fall to $2,500-2,700 by the end of 2026.

Citi believes that a variety of factors are weighing on gold bulls. These factors include weakening investment demand, improved global economic growth prospects, and the Federal Reserve's rate cuts to shift monetary policy to neutral, which could lead to a decline in gold prices.

Analysts believe that investment demand for gold will weaken in late 2025 and 2026 as Trump's popularity rises and the "put option" on US economic growth starts to take effect, especially as the US midterm elections come into focus. Further, "we see a lot of scope for the Fed to cut from restrictive policy to neutral," they added.

Citi's bullish scenario shows gold prices hitting new highs in the third quarter of 2025, driven by tariffs, geopolitics, and stagflation concerns. Conversely, in its bearish scenario, Citigroup expects gold prices to see a sell-off, likely triggered by a swift tariff resolution. Citigroup noted that both the bullish and bearish scenarios have a 20% probability of occurring.