“Event-driven bids for gold seem to be occurring more frequently and may be the new normal… In short, even as the rates and forex channel dominate the outlook for gold pricing, the yellow metal is increasingly being used by investors as a policy and tail risk hedge,” Citi said.
Citi projected gold prices are on track to notch levels of $1,270 per ounce by the end of 2018, before climbing to around $1,350 per ounce and $1,370 per ounce over the next two calendar years.
“Philosophically everyone wants gold, it should always be safe but there is huge downside risk,” Nandini Ramakrishnan, global markets strategist at JPMorgan, told CNBC Monday.
Ramakrishnan said gold prices had witnessed “massive moves akin to the equity market,” before adding that investors should treat the commodity with caution.
Gold is highly sensitive to U.S. interest rate hikes, as such moves increase the opportunity cost of holding non-yielding bullion, while supporting the dollar — in which the commodity is priced.
Spot gold edged 0.2 percent lower to $1,290 per ounce on Monday morning. The yellow metal is up 12 percent since the start of the year.
