Major analyst unveils surprising gold price forecast for 2026 originally appeared on TheStreet.
Increasing economic worry amid a tariff-fueled trade war has caused gold prices to surge this year.
So far, gold has rallied 30% in 2025, including a 13% gain over the past three months. Much of the gains follow President Trump’s tariff announcements, including on April 2, so-called “Liberation Day.”
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Gold’s big returns are particularly impressive compared to other assets, including stocks and bonds. The S&P 500 is up about 2% this year, and the 10-year Treasury Note yield has climbed to 4.41% from below 4% ahead of the new tariffs.
The rally in gold has likely caught the attention of many investors, who are wondering if the yellow metal still has room to run.
This week, commodities analysts at Citigroup tackled the matter, unveiling a new gold forecast and price target.
The U.S. economy is facing its stiffest challenge since 2022, when skyrocketing inflation caused the Fed to pivot from a zero interest rate policy to the most aggressive pace of rate hikes since the 1980s.
Inflation has proven stickier than hoped, and job losses are rising and could worsen as tariffs’ bite are felt through supply chains in the coming months.
Although the White House has paused many reciprocal tariffs announced on Liberation Day, tariffs of 25% remain on Canada, Mexico, and autos. A 10% baseline import tax applies to most other imports. Meanwhile, new China tariffs of 30% have increased total tariffs above 50% on everything from clothing to car parts.
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Unemployment has increased to 4.2% from 3.4% in 2023, and layoffs year-to-date exceed 696,000, according to Challenger, Gray & Christmas, up 80% year-over-year through May.
Meanwhile, inflation has made little progress since last fall. In May, the Consumer Price Index showed inflation up 2.4% from one year ago, unchanged from September.
Inflation’s stalled decline and job market cracks have trapped the Federal Reserve in a box, trapped by its mandate.
The Fed’s mission is to maintain low employment and inflation, two often competing and contradictory goals. Raising rates lowers inflation but increases joblessness, while lowering rates increases inflation but boosts employment.
Toss into the mix the uncertainty associated with tariffs’ impact on inflation this year, and it’s not hard to understand why the Fed is stuck on the sidelines, unwilling to risk fanning inflationary flames by cutting rates even as economic data disappoints.
