The next step for gold looks at 3800, with an important support line at 3600 USD? Two major factors will be key to whether gold prices can rebound

On Monday, the spot gold price fell below the $4,000 mark. Citigroup believes that the short-term market trend has reversed, and the downward trend in gold prices is expected to continue.

According to the trading desk, on October 27, Citigroup published a research report, lowering its short-term gold price target for 0-3 months from $4,000 to $3,800, and believes that the key technical support level is around the 100-day moving average at approximately $3,600.

(Since April of this year, Citigroup has adjusted its forecast strategy for gold prices within the next three months each time)

The research report points out that this shift is primarily driven by two core factors. First, the cooling of geopolitical risk expectations has weakened gold's appeal as a safe haven. Second, there is up to $17 trillion in unrealized profits in the market, and any small-scale profit-taking could create significant selling pressure.

Therefore, chasing high at the current price level carries great risk. However, the report also emphasizes that gold's value as a long-term strategic hedging tool remains solid.

Geopolitical Risk Cools, Gold Price Short-Term Target Adjusted to $3,800

The Citigroup report clearly states that the primary factor driving gold prices down is the easing of the macro environment.

The report observes that the Trump administration's strategy is shifting from confrontation to trade negotiations with multiple countries, covering Malaysia, Thailand, Vietnam, Cambodia, and possibly extending soon to Brazil and India. These developments significantly reduce market concerns about global trade tensions.

Secondly, the massive unrealized profits held by investors in gold pose serious internal pressure on gold prices.

The report estimates that unrealized profits in the global gold inventory have reached as high as $17 trillion.

Citigroup warns that even a slight profit-taking on this $17 trillion—such as a mere 2% position adjustment (equivalent to about 3-4% profit realization)—could release a volume of gold supply equivalent to twice the annual production of global mines.

(The value of global gold inventory has increased to $30 trillion, up $17 trillion from three years ago)

This potential selling pressure, especially during year-end asset rebalancing, hangs over gold prices like the "Sword of Damocles," with a scale sufficient to overwhelm any demand in the physical gold market.

Additionally, expectations that the U.S. government shutdown may end, combined with the shift in price momentum in the gold market itself, together form the basis for a short-term bearish outlook.

Based on this, Citigroup has not only lowered its gold price target for the next 0-3 months to $3,800/ounce (close to the 50-day moving average) but has also significantly reduced its silver price target from $55/ounce to $42/ounce during the same period

Can Gold Prices Rebound? Two Key Variables Worth Watching

Despite a bearish outlook in the short term, the report also points out two key catalysts that could reverse the downturn or determine whether gold prices rebound:

Federal Reserve Personnel Changes and Monetary Policy Expectations:

• Whether Federal Reserve Governor Lisa Cook is replaced before the board meeting on February 20, 2026, will be a "key catalyst" affecting market expectations for real interest rates.
• If she remains in her position or is not replaced by a market-expected dovish figure, interest rate expectations may stay high, which would be unfavorable for gold. Conversely, this could provide support for gold prices.

Sustainability of the U.S. Economy and Stock Market:

• The "AI-led U.S. stock market bull run" and the "sustained capital expenditure and strong stock market-driven U.S. growth" promoted by the Trump administration as the baseline scenario for 2026.
• If this scenario materializes, a strong economy and stock market will significantly diminish the appeal of gold, making it difficult for its bull market to continue at current high levels.
• Currently, the U.S. two-year inflation breakeven rate has fallen to 2.5%, and the recent stability of the dollar supports the view of a robust economy.

Citigroup emphasizes that in the medium to long term, the logic of allocating gold to hedge against potential geopolitical conflicts, such as the Russia-Ukraine tensions, stock market crashes, or currency devaluation/economic recession triggered by U.S. government debt, remains "very strong."

The key question is at what price level asset allocators will re-enter the market, and Citigroup believes that during the decline in gold prices, $4,000 per ounce is clearly not an attractive price point.