Gold prices have seen a notable decline since reaching an all-time high of $5,594.82 per ounce on January 29. Analysts from Citi have indicated that if the Strait of Hormuz remains closed until the end of summer, gold could fall further to around $3,500 per ounce, representing a potential decrease of approximately 19.7% from the current price of $4,357.90 per ounce.
This situation raises concerns about gold's status as a safe haven asset, particularly in light of a stronger-than-expected U.S. jobs report that has increased expectations for interest rate hikes, which typically exert downward pressure on non-yielding assets like gold. Citi has revised its three-month price target for gold down to $4,000 per ounce from $4,300 per ounce.
The analysts note that the ongoing geopolitical tensions and high energy prices are contributing to the challenges facing gold, and they suggest that the near-term outlook is negative for investors without a long-term strategy.
However, they maintain a bullish long-term view on gold, anticipating that prices could stabilize once the situation in the Strait of Hormuz improves and energy prices decline