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Analysts at Citigroup upped their 2021 gold price forecast, citing “we lift the 2021E base case gold price forecast by ~$300/oz, versus our early July update, to a record $2,275/oz.”

Key quotes

“Maintain our 0-3m point-price target at $2,200/oz and a 6-12m target at $2,400/oz. 

Occasional liquidation squeezes, drawdowns, and profit-taking activity for gold seem likely in a high volatility market environment. But investors will probably buy that dip on the back of an accommodative central bank reaction function.

Record weak gold jewelry consumption and tepid official sector gold demand may limit the performance of gold

The record pace of inflows and overall growth in bullion ETF holdings reflects strong investor appetite for gold. 

Greater inclusion of gold by portfolio asset allocators, especially non-traditional players (e.g., pensions, insurance, family offices), is a further tailwind for the bullish gold thesis in the medium-term. 

Current Fed policy and liquidity provisions have also tempered concerns about another sharp collapse in inflation expectations. So the overall gold price trend should, on balance, remain upward sloping in the current regime.”