(L)
Oil
pumpjacks
and
(R)
gold
bars
Getty
Images
Gold
prices
could
soar
to
$3,000
per
ounce,
and
oil
to
$100
per
barrel
within
the
next
12
to
18
months
subject
to
any
one
of
three
possible
catalysts,
according
to
Citi.
Gold,
which
is
currently
trading
at
$2,016,
could
surge
by
about
50%,
if
central
banks
sharply
ramp
up
purchases
of
the
yellow
metal,
a
possible
stagflation,
or
in
case
of
a
deep
global
recession,
Aakash
Doshi,
Citi’s
North
America
head
of
commodities
research,
told
CNBC.
Central
bank’s
gold
rush
“The
most
likely
wildcard
path
to
$3,000/oz
gold
is
a
rapid
acceleration
of
an
existing
but
slow-moving
trend:
de-dollarization
across
Emerging
Markets
central
banks
that
in
turn
leads
to
a
crisis
of
confidence
in
the
U.S.
dollar,”
Citi
analysts
including
Doshi
wrote
in
a
recent
note.
That
could
double
central
bank’s
gold
purchases,
challenging
jewelry
consumption
as
the
largest
driver
of
gold
demand,
Doshi
elaborated.
Gold
prices
in
the
past
one
year
Central
banks’
gold
purchases
have
“accelerated
to
record
levels”
in
recent
years,
as
they
seek
to
diversify
reserves
and
reduce
credit
risk,
Citi
said.
China
and
Russian
central
banks
are
leading
gold
purchases,
with
India,
Turkey,
and
Brazil,
also
increasing bullion
buying.
The
world’s
central
banks
have
sustained
two
successive
years
of
more
than
1,000
tons
of
net
gold
purchases,
the
World
Gold
Council
reported
in
January.
“If
that
goes
again
[to]
double
very
quickly
to
2,000
tons,
we
think
that
would
be
actually
very
bullish
for
gold,”
Doshi
told
CNBC
via
phone.
A
global
recession?
Another
trigger
that
could
drive
gold
to
$3,000
would
be
a
“deep
global
recession”
that
could
spur
the
U.S.
Federal
Reserves
to
cut
rates
rapidly.
“That
means
the
brakes
have
been
cut,
not
to
3%,
but
to
1%
or
lower
–
that
will
take
us
to
$3,000,”
Doshi
said,
noting
that
this
is
a
low
probability
scenario.
Gold
prices
tend
to
share
an
inverse
relationship
with
interest
rates.
As
interest
rates
dip,
gold
becomes
more
appealing
compared
to
fixed-income
assets
such
as
bonds,
which
would
yield
weaker
returns
in
a
low
interest
rate
environment.
An
employee
holds
one
kilogram
gold
bullion
at
the
YLG
Bullion
International
Co.
headquarters
in
Bangkok,
Thailand,
on
Friday,
Dec.
22,
2023.
Bloomberg
|
Bloomberg
|
Getty
Images
The
Fed
benchmark
interest
rate
has
been
between
5.25%
and
5.5%
since
July
2023,
the
highest
since
January
2001
when
it
shot
to
6%
following
the
dot-com
bubble
burst.
Markets
expect
the
Fed
to
cut
rates
in
May
or
June.
Stagflation
—
an
increasing
inflation
rate,
a
slowing
economic
growth
and
rising
unemployment
—
could
be
another
trigger,
though
Doshi
said
there’s
a
“very
low
probability”
of
such
a
scenario.
Gold
is
perceived
as
a
safe
haven
and
tends
to
perform
well
in
periods
of
economic
uncertainty
when
investors
move
away
from
the
riskier
assets
such
as
equities.
These
three
potential
triggers
aside,
Citi
maintains
that
their
base
case
for
bullion
is
$2,150
in
the
second
half
of
2024,
and
the
price
of
gold
to
average
a
little
over
$2,000
in
the
first
half.
A
new
record
could
be
reached
towards
the
end
of
2024,
Doshi
added.
Oil
at
$100?
Another
wildcard
scenario
highlighted
in
Citi’s
report
was
for
oil
prices
to
hit
triple
digits
again.
The
catalysts
for
oil
to
hit
$100
per
barrel
include
higher
geopolitical
risks,
deeper
OPEC+
cuts
and
supply
disruptions
from
key
oil
producing
regions,
Doshi
said.
The
ongoing
Israel-Hamas
war
has
not
hit
oil
production
or
exports,
with
the
only
significant
impact
being
the
Houthi
attacks
from
Yemen
on
oil
tankers
and
other
ships
traversing
the
Red
Sea.
Major
oil
producer
Iraq
has
been
impacted
by
the
conflict
and
any
further
escalation
could
hurt
other
major
OPEC+
suppliers
in
the
region,
Citi
said.
Oil
prices
in
the
past
one
year
Recent
developments
show
that
tensions
have
been
rising
on
the
border
between
Israel
and
Lebanon,
raising
fears
that
the
war
in
Gaza
could
spread
elsewhere
in
the
Middle
East.
Doshi
said
Iraq,
Iran,
Libya,
Nigeria
and
Venezuela
are
vulnerable
to
supply
disruptions,
with
steeper
U.S.
sanctions
policy
on
Iran
and
Venezuela
potentially
on
the
cards.
Other
geopolitical
risks
such
as
Russian
oil
supplies,
should
Ukraine
attack
Russian
refineries
with
drones,
cannot
be
ruled
out,
Citi’s
analysts
wrote.
Doshi
maintained
that
their
base
case
for
oil
stands
at
around
$75
per
barrel
for
the
year.
Global
benchmark
Brent‘s April
futures
were
trading
at
$83.56
a
barrel,
while
the
U.S. West
Texas
Intermediate March
futures
stood
at
$79.13
per
barrel.
