①Gold prices have broken through $4,600 per ounce. The strong rally at the beginning of the year is related to concerns about the Federal Reserve's independence, ETF and central bank gold purchases, and the US fiscal deficit; ②Silver prices have risen by 28.5% this year, mainly driven by safe-haven demand; ③Citi forecasts that the target price for gold in the next three months is $5,000 per ounce, and for silver, it is $100 per ounce, but a pullback may occur after reaching these highs.
Following a brief correction in October last year, $XAU/USD (XAUUSD.CFD)$ there has been a sustained and robust upward trend, with the current trading price surpassing $4,600 per ounce. Concerns over the Federal Reserve's independence, coupled with large-scale gold purchases by ETFs and central banks as well as persistent U.S. fiscal deficits, have all contributed to supporting the rise in gold prices.
$XAG/USD (XAGUSD.FX)$ The rally has been equally remarkable, with London silver prices gaining an impressive 28.5% year-to-date, breaking through $90 per ounce. Silver has now emerged as the second-largest performing asset globally. The primary driver of silver’s rise also stems from increased safe-haven demand in the market.
However, this astonishing surge may not be over yet. Citigroup analysts noted in a report on Tuesday that they have raised their three-month target price for gold to $5,000 per ounce and for silver to $100 per ounce. However, after reaching these highs, both gold and silver are likely to experience a pullback.
Pullbacks in a Bull Market
$5,000 per ounce could be a key level for gold prices. In a report last week, HSBC projected that rising geopolitical risks might push gold prices above $5,000 per ounce in the first half of the year, but prices could see a significant pullback in the second half.
HSBC expects significant volatility in gold prices this year. If geopolitical risks diminish or the Federal Reserve halts rate cuts, gold prices may retreat to a low of $3,950 per ounce. However, after 2026, gold prices are expected to rise further, averaging $4,625 per ounce next year and $4,700 per ounce in 2028.
On the other hand, consulting firm Metals Focus stated that silver prices are likely to reach triple-digit peaks this year because the silver market is smaller in scale. When it benefits from many macroeconomic factors driving gold investment, its price volatility will be amplified.
Citi analysts pointed out that silver's performance will outshine gold’s, but later in the precious metals bull market, industrial metals will gain prominence, becoming the market focus this year.
They also emphasized that the upcoming US decision on critical mineral tariffs may pose dual risks to precious metals in terms of trade flows and prices. If precious metals are excluded from US tariff measures, metal inventories may flow out of the US, easing physical supply shortages in other regions globally, and exerting downward pressure on prices.
However, if the sharp decline in prices of precious metals such as silver and industrial metals triggered by key mineral policies is seen by analysts as a crucial opportunity to buy on dips during a bull market, the underlying bullish drivers for the entire metals market remain intact.
Editor/Doris
