C - Citigroup Sees Gold At $3000 And Oil At $100 Within 18 Months
2024-02-20 09:47:50 ET
Analysts at %Citigroup (NYSE: C) have outlined several scenarios that could push the price of %Gold to $3,000 U.S. per ounce and the price of oil to $100 U.S. per barrel within the next 18 months.
Gold, which is currently trading at $2,015 U.S. an ounce, could surge by 50% if central banks sharply ramp up their purchases of the precious metal, if stagflation emerges, or if we enter a global recession, according to Citigroup’s commodities research unit.
Aggressive central bank gold purchases could challenge jewelry consumption as the largest driver of gold demand moving forward, theorizes Citigroup’s commodities team, noting that central bank gold purchases have reached record levels.
Indeed, the World Gold Council reported in January of this year that central banks around the world have purchased more than 1,000 tons of gold in each of the past two years.
Citigroup also sees oil prices reaching $100 U.S. a barrel in the coming 18 months due to heightened geopolitical risks, deeper OPEC+ production cuts, and supply disruptions from key oil producing countries.
Iraq has already been impacted by the ongoing Israel-Hamas war, and any further escalation could hurt other major OPEC+ suppliers in the region, says Citigroup in a note to clients.
There are increasing risks that the war in Gaza could spread elsewhere in the Middle East, including in Lebanon, which also borders Israel.
Citigroup states that Iraq, Iran, Libya, Nigeria, and Venezuela are also vulnerable to supply disruptions, especially if the U.S. imposes greater sanctions on Iran and Venezuela in coming months.
Other geopolitical risks include the stability of Russian oil supplies amid its ongoing war with Ukraine.
Brent crude oil, the international benchmark, is currently trading at $83.41 U.S. per barrel, while West Texas Intermediate (WTI) crude oil, the U.S. standard, is trading at $79.80 U.S. a barrel.
The stock of Citigroup has risen 10% in the last 12 months and currently trades at $54.85 U.S. per share.