Can gold prices scale $3000, and oil prices $100 by 2025?

According to latest estimates by the Citibank group, analysts say it’s possible for gold prices to hit $3000 an ounce, and for oil prices to hit $100 in the next 12 to 18 months.

The strategic team for the group put three possible catalysts that could materialize these forecasts by 2025. 

The major catalysts for a gold surge would be an increase in gold holdings by global central banks, or an inflationary recession, or if a deep depression hit the global economy.

Central Banks Purchases 

Citibank analysts said in their memo, that the most likely path towards $3000 would be a massive surge in gold purchases by central banks, especially in developing economies as a potential trust crisis around the dollar grows. 

Such purchases already scaled record highs in recent years as central banks seek to reduce credit risks and diversify holdings, especially in China, Russia, India, Turkey, and Brazil. 

The International Gold Council reported that net gold purchases by global central banks surpassed 1000 tonnes for two consecutive years.  

If such purchases increased to 2000 tonnes, it would provide a massive boost to gold prices.

Inflationary Recession 

An inflationary recession leads to higher prices and slower growth and higher unemployment, boosting demand for gold as a safe haven.

Citigroup analysts believe that such a scenario is very unlikely, but remains possible.

Global Depression 

The most important scenario which could push gold prices to $3000 would be a global economic depression that would force central banks, led by the US Federal Reserve, to cut interest rates. 

That means cuts to below 1%, which could push gold prices to $3000, however it’s an unlikely scenario. 

Aside from these scenarios, Citigroup’s main forecasts for gold prices remain at $2,150 an ounce through the second half of 2024. 

Oil’s Path to $100 a Barrel 

On oil, Citigroup analysts said oil prices could hit triple digits once more if geopolitical risks surged, or if OPEC + enacted deeper cuts, or if supply disruptions occurred. 

The ongoing Israel-Hamas war in Gaza hasn’t really impacted oil production or exports, with the sole influence coming from the Yemeni Houthi group attacking ships, including oil tankers in the path through the Red Sea. 

The report said that Iraq, a major oil producer, is impacted by the conflict, and any escalation could hurt other major OPEC+ producers in the region. 

The Citigroup report also warned of potential supply disruptions from Iran, Libya, Nigeria, Venezuela, and others, especially if the US enacted more stringent sanctions on Iran and Venezuela. 

Other geopolitical risks would develop if Ukraine managed to attack Russian oil refineries with drones.