Analysts at Citigroup have issued a report stating that gold has closed below its 200-day moving average for the first time since September 2023, influenced by the robust US employment data released last Friday (the 5th). The firm is maintaining its bearish outlook on the precious metal and has reduced its 0-3 month price target from $4,300 per ounce to $4,000.

The report notes that to sustain current price levels, physical gold purchases would need to continue at a pace of approximately $900 billion annually. However, the typical annual purchase volume from 2010 to 2024 (in today's dollars) has only ranged between $250 billion and $400 billion.

The bank expresses concern that if the Strait of Hormuz remains closed throughout the summer, gold purchases could decline to a still-substantial $700-$750 billion per year. This scenario would likely trigger a mechanical price decline to levels seen 9-10 months ago, around $3,500 per ounce.

Key Points on Short-Term Outlook

Citigroup indicates that near-term risks for gold are skewed to the downside. In this environment, buying on dips is only suitable for investors who hold a strong conviction that geopolitical tensions will not escalate further.

Long-Term Perspective

Over the long term, the bank maintains a bullish view on gold. However, it warns that in the short term, the risk is exceptionally high for any investor without extremely wide stop-losses and a long investment horizon.