Gold price forecast: can bullion hit $4,500 as Citi turns more bullish?

Gold steadied near a more than one-week high on Tuesday as investors waited for details of the preliminary US-Iran agreement that has cooled oil prices and revived hopes that inflation pressure may ease.

Spot gold was little changed around $4,315 an ounce after Monday’s sharp rally, while August futures slipped.

The metal remains supported by a softer dollar and reduced expectations of another aggressive rate move by the Federal Reserve.

Still, traders are reluctant to chase prices much higher before the deal is formally clarified and Chair Kevin Warsh delivers his first Fed policy message on Wednesday.

Peace deal keeps gold supported

The latest move in bullion is less about classic haven demand and more about the interest-rate channel.

The US-Iran framework has raised hopes that the Strait of Hormuz could reopen more fully, reducing the risk that energy costs stay high for months.

That matters because the recent oil shock had lifted inflation expectations and made investors more cautious on gold.

Bullion offers no yield, so it tends to struggle when markets expect higher returns from cash or bonds.

The analysts said that gold had enjoyed a strong run since late Thursday on Iran-related headlines, adding that the euphoria rally could last into the expected signing ceremony later this week.

Fed tone becomes the main risk

The next catalyst is the Federal Reserve decision. Rates are widely expected to be left unchanged, but traders will be watching Warsh’s language on inflation, oil and the path for policy.

A softer message could put more pressure on the dollar and support another leg higher in gold.

A firmer tone would make the rally harder to sustain, especially after Monday’s jump.

The analysts noted that if Warsh signals at least one rate cut could be on the table later this year, the dollar may weaken further and gold could rally again.

Banks stay bullish, but volatility remains

Citi added to the supportive tone by lifting its zero-to-three-month gold forecast by $500 to $4,500 an ounce.

The bank said broader risk sentiment could improve as the US-Iran memorandum reduces pressure on oil markets.

Even so, the trade remains fragile. Details of a permanent truce are still pending, and any setback around Hormuz or Iran’s nuclear programme could quickly return volatility to energy and metals markets.

Other precious metals were softer on Tuesday.

Silver fell near $69 an ounce, while platinum and palladium also declined, suggesting investors were becoming more selective after Monday’s broad rally.