Gold May Hit Another Record High By Year End, Says Citi

According to Citigroup Inc, gold could hit a new record high before the end of the year, partly due to risks from the US presidential election. In a quarterly outlook report by the bank, it forecasts a surge of more than $200 for the bullion futures from the current levels on the uncertainty of the election and delays about the economy.

The election "could be an extraordinary catalyst for gold flat price and volatility skew late in the fourth quarter, even though historically there is no clear pattern for gold trading or price volatility into and after U.S. elections," Citi said. "That is one reason why we expect gold prices to hit fresh records before year-end."

The bank has maintained a 0-3 month price target at $2,200 per ounce and a 6-12 month target at $2,400.

Spot gold was trading lower at $1,877.52 per ounce in the morning session on 23 September. On 22 September, it closed at $1,900.58 an ounce.

Last month, gold hit a new all-time high of $2,070.05 an ounce in the international market on record pace in inflows and overall growth in bullion ETF holdings. Gold price in India had surpassed Rs 57,000 per 10 grams on MCX.

The appetite for the precious metal is expected to remain strong, however, "record weak gold jewelry consumption and tepid official sector gold demand may limit the performance of gold," Citi said.

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, the bank added.