Gold rebounds as Citi lifts target to $4,500 on US-Iran oil deal

Gold traded near $4,150 an ounce after Citi raised its three-month price target to $4,500 and Barclays declared the metal's 25% correction a price reset, not a bull-market end.

"The selloff has cleared excessive speculative positioning, and the macro setup is turning favorable," a Barclays research team said in a June 15 note, citing the bank's fair-value model at approximately $4,150 an ounce.

Citi lifted its three-month forecast from $4,000 to $4,500 an ounce while maintaining a six-to-12-month target of $5,000, according to a separate report published the same day. The catalyst: the US and Iran are set to sign a memorandum of understanding on June 19 to reopen the Strait of Hormuz, a deal that Citi said could push Brent crude to $75 a barrel in the third quarter and $65 by 2027, down from prior forecasts of $110 and $80.

Gold had fallen about 25% from a January peak near $5,500 an ounce, dragged lower by a 2.5% stronger dollar and a 10% rally in the S&P 500. With those headwinds fading and the US-Iran deal expected to reduce energy-driven inflation, both banks see the metal's structural support — central bank buying, de-dollarization and persistent inflation — reasserting itself.

Barclays Sees Inflation as Gold's Structural Backbone

Barclays' fair-value model, which incorporates US CPI, the S&P 500, the dollar and central bank demand, estimates that every one-percentage-point rise in US consumer prices lifts gold by about 5%. The bank said the energy-price shock from the Hormuz closure had already embedded higher inflation into the economy, and even after oil retreats, that pass-through will continue supporting gold prices.

The bank's derivatives strategy team noted that call-option implied volatility on gold has fallen to near decade lows while put skew has risen to decade highs, a structural shift that makes upside optionality unusually cheap for investors seeking asymmetric returns.

Central Bank Buying Resumes as Geopolitical Tensions Ease

First-quarter central bank gold purchases rose 17% quarter-over-quarter by ounce, according to the World Gold Council, led by Poland and Uzbekistan. Tether, the largest stablecoin issuer, bought 12.6 tonnes in the period, bringing its total holdings to 154 tonnes and ranking it among the top four buyers globally.

Turkey and Russia sold gold during the quarter to support their currencies, but Barclays said those sellers are likely to resume accumulation as geopolitical stability improves. Citi's base case — assigned a 60% probability — sees the MoU leading to a roughly 4-million-barrel-per-day paper supply surplus in oil markets by 2027, a scenario that would keep inflation expectations contained and allow central banks to ease policy.

Gold at current levels trades roughly in line with its five-year average inflation-adjusted valuation, according to Barclays, and remains about 25% below the January all-time high of $5,500 an ounce. The next major event is the June 19 signing in Switzerland, after which physical oil flows through Hormuz could take 40 to 50 days to normalize, according to mine-clearance estimates cited by DW.

This article is for informational purposes only and does not constitute investment advice.