Gold slips to nearly three-week low; Citi cuts short-term gold, silver price outlook

[stack of shiny gold bars 3d illustration]
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Gold futures finished below $4,000/oz on Tuesday on follow-through selling pressure from the previous session's steep losses, as optimism over the meeting later this week between President Trump and China's President Xi continued to dent demand for safe-haven assets.

Top U.S. and Chinese economic officials finalized the framework of a potential deal for the two leaders to review at their meeting on Thursday, a bearish development for safe-haven assets that typically thrive on geopolitical and trade tensions.

Investors also await the outcome of the U.S. Federal Reserve's two-day policy meeting on Wednesday, which is expected to result in a quarter-point cut to interest rates.

Gold is likely to remain under pressure until the fast money that recently joined the market is washed out," ANZ analysts said in a note, pointing to the profit taking that has followed the metal's 26% rise achieved since the start of September.

"We agree that the market has become overbought, which finally gave rise to this week's correction," Bank of America analysts wrote, but "for rallies to end, the fundamental backdrop needs to change and so far that has not happened."

But Citi analysts downgraded their short-term gold and silver price targets, lowering the zero-to-three month gold price forecast to $3,800/oz from $4,000 previously and its silver forecast to $42/oz from $55, citing shifts in global market conditions.

"The litany of worries that are driving gold higher may eventually need to become the base case to sustain this bull run through 2026," Citi said in a note, adding that the medium-to-long term case to allocate towards gold as a hedge against possible geopolitical and economic concerns remains strong.

Gold remains up more than 50% YTD, supported by expectations of further U.S. interest rate cuts, central bank buying and concerns over fiscal deficits.

Front-month Comex gold (XAUUSD:CUR [https://seekingalpha.com/symbol/XAUUSD:CUR]) for October delivery closed -0.9% to $3,966.20/oz, its third consecutive loss and lowest settlement value since October 9, but front-month Comex October silver (XAGUSD:CUR [https://seekingalpha.com/symbol/XAGUSD:CUR]) tallied a corrective bounce from the recent strong selling pressure, ending +1.2% to $47.125/oz.

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