by Energy News updated February 1, 2026 3:03 AM
Citi said 'on Friday that the gold investment allocations were being influenced by a wide range of geopolitical and economic risks. However, around half of these risks may disappear later in the year.
Citi said that some of the key risks driving gold demand, such as U.S. China tensions, China Taiwan risks, concerns about U.S. Government debt, and uncertainty surrounding artificial intelligence, were likely to keep prices high by "historical standards".
The bank believes that approximately half of the risks embedded in the gold price will either not be realized?in 2026, or they won't persist beyond that year.
The bank said that "we see the Trump administration pushing for U.S. Goldilocks during 2026's midterm election year, and we also see an end to the Russia/Ukraine conflict, and a de-escalation of Iran as major risk reductions compared to today."
On the back of geopolitical uncertainty and economic instability, spot gold reached a new record high this week.
Prices fell by 12.6% on Friday as of 1840 GMT. This was the biggest percentage drop ever recorded. The 'dollar' firmed up after U.S. president Donald Trump announced that former Federal Reserve Governor Kevin Warsh would be his choice to take over the U.S. central bank in May when Jerome Powell’s term ends.
Citi said that if Warsh's nomination is confirmed, it will "further cement our long-standing case that the Fed maintains its political autonomy, and another medium-term factor bearish for gold prices." (Reporting and editing by Alex Richardson in Bengaluru, Anushree mukherjee from Bengaluru)
(source: Reuters)
