Gold bugs be warned. Your party is ending with only enough time left for a last round of drinks before the fun ends as the gold price heads for a 20% fall.
That’s the latest forecast from Citi, an investment bank, with another bank, UBS, adding its note of caution about the outlook for gold which has been one of the best investments for the past three years but is struggling to continue rising.
Improving economic growth and the start of an interest rate cutting cycle are expected to weigh on gold which has risen by 108% since late 2022, and 45% over the past 12-months to trade around $3394 an ounce.
But since reaching $3433/oz in April gold has struggled to make meaningful headway, briefly returning to that all-time high late last week when Israel launched its aerial bombardment of Iran but failing to maintain upward momentum this week.
UBS, in a note circulated to Australian investors, said it remained bullish on gold but believed guidance from the miners ahead of their profit reports for the year to June 30 was “not without risk”.
Sell Evolution Buy Newmont
Evolution Mining, Australia’s second biggest goldminer, has been downgraded to sell by UBS after an 81% price rise since the start of 2025.
“We no longer have valuation support and downgrade Evolution to sell with a share price target of A$6.70,” UBS said, a price forecast which is 21.7% down on last sales at A$8.56.
Northern Star, Australia’s biggest gold producer, was downgraded by UBS to neutral though its share price could still rise to A$23, up 9% on last sales at A$21.08.
Newmont, the big U.S.-based goldminer with a listing in Australia, is the only one of the big three to earn a buy recommendation from UBS thanks to its competitive free cash flow with securities in Australia tipped to rise by 17.4% to A$105.
Citi’s view is that investment demand for gold will start to fade later this year and into 2026.
“In the near term, trade deals (with Britain. China, Japa, India and Europe), and the passing of the (net stimulatory) Big Beautiful Bill should improve sentiment and stop gold moving much higher,” Citi said.
“Indeed, we do not see bond vigilante momentum during 2025/26 as the BBB delta is largely funded by tariff revenues.
“Further, over the next six-to-nine months we see scope for the Federal Reserve to cut rates from a restrictive policy to neutral, bolstering growth sentiment in the U.S. and globally.”
Citi said it was recommending that goldminers use the extraordinary strength in the long-dated price, which is at $4000/oz using five-year forward trades, to insure against downside below $3600/oz-to-$3700/oz.
Seen The Highs
Gold, according to Citi, is likely to consolidate around $3100/oz-to-$3500/oz over the next three months.
“But our work suggests that we have already seen the highs (for gold),” Citi said.
The bank said its research showed that a gold deficit should peak in the third quarter of this year and the market should fundamentally weaken after that, driven by lower investment demand.
“Our work suggests that gold returns to between $2500/oz and $2700/oz by the second half of 2026,” Citi said.