Citi sticks with 'short gold' as appropriate pain trade over medium-term

Analysts at Citi still think short gold is the appropriate 'pain trade' over the medium-term, despite "tangible" upside risks to their fourth quarter 2021 average spot price forecast of $1,700/oz..

Citi defined medium-term as being the back half of 2022 and 2023.

In their opinion, that was exactly what financial outflows were signalling, notwithstanding the stabilisation in prices between $1,750-1,800/oz. seen quarter-to-date.

Among the factors that might lie behind weaker bullish sentiment towards, particularly versus 2019 and 2020, were the bottoming of TIPS yields in the belly of the curve, more aggressive Fed pricing in STIR markets coupled with a stronger US dollar and inflows into crypto assets.