Going long on gold has become one of the most crowded trades in recent months. But where there's a crowd, risk tends to accumulate.

Amid widespread bullishness, Citigroup is taking a contrarian stance. The bank now expects gold prices to fall below $3,000 in the coming quarters.

In a recent note led by Max Layton, Citi’s analyst team projected that by the second half of 2026, gold prices could retreat to around $2,500 to $2,700 per ounce. The expected decline would be driven by weakening investment demand, improved global growth prospects, and interest rate cuts by the Federal Reserve.

Why would Fed rate cuts trigger a gold price drop? While that may seem counterintuitive, the historical inverse correlation between gold and the U.S. dollar has largely broken down in recent years. The primary drivers of gold’s rally have instead been safe-haven demand from investors and aggressive central bank purchases, largely unrelated to the dollar index. A Fed pivot toward easing would signal improving global trade conditions, resolution of tariff tensions, and reduced geopolitical risk—factors that naturally shift investor focus away from gold and back toward the real economy.

Citi expects this dynamic to unfold from Q4 2025, as gold investment demand begins to fade due to a modest improvement in global growth confidence. With U.S. midterm elections approaching, the report suggests that Trump may be forced into some level of compromise, while the “Big Beautiful Bill” is expected to come into effect—potentially supporting U.S. and global economic growth.

Under Citi’s base case scenario (60% probability), gold is projected to consolidate above $3,000 through Q3 2024 before beginning a gradual decline. In a bull case (20% probability), escalating geopolitical tensions, tariff volatility, and U.S. stagflation could drive gold prices to new record highs. Conversely, the bear case (20% probability) foresees a successful resolution of trade talks, de-escalation in the Middle East, and renewed global economic growth—resulting in aggressive gold selling.

Beyond gold, Citi is increasingly bullish on aluminum and copper. The bank highlights that aluminum is “highly sensitive to global growth and sentiment recovery,” while copper’s structural supply-demand gap may widen further. As gold mania fades, these “economic barometer” metals may take center stage in the commodities market.