China Fuels Gold Rally: Citi Raises 3-Month Target to $3,500 Amid Tariff Worries

As global trade tensions heat up and market volatility rises, gold continues to shine as a safe-haven asset. In a recent note, Citi Research upgraded its gold price forecast for the next three months to $3,500 per ounce, up from the previous $3,200, citing renewed buying by Chinese insurers and rising geopolitical risks.

1. The Chinese Insurance Factor: New Demand Driver

According to Reuters (April 17, 2025), China’s recent move to allow 10 major insurance firms to allocate up to 1% of their total assets into gold could spark a significant demand boost of approximately 255 tonnes per year. This figure is equivalent to about a quarter of the total annual global central bank gold purchases.

This strategic policy shift aims to diversify reserves, reduce dependence on the U.S. dollar, and provide protection against financial volatility—especially amid the escalating trade tensions with the United States.

🔹 "The rise in Chinese institutional gold buying may prove to be one of the most underappreciated forces driving this bull run," Citi noted.

2. A Fragile Global Backdrop: Tariff Risks and Market Uncertainty

Citi’s bullish revision comes amid a complicated global economic outlook. Several key risks continue to drive investors toward safe assets like gold:

The U.S. is considering fresh tariffs on Chinese goods, including strategic minerals and advanced tech exports.

The U.S. dollar has softened slightly, as markets begin to price in potential interest rate cuts by the Federal Reserve.

Equity markets remain cautious, with sideways trading seen across U.S., European, and Asian exchanges.

The confluence of tariff anxieties, weaker dollar momentum, and investor caution has triggered a renewed wave of safe-haven flows into the precious metals market.

3. Physical Market Tightness: Supply vs Demand

Citi also warned that the physical gold market is experiencing an unusual supply strain, further supporting higher prices. New mine output is not keeping pace with demand, particularly as central banks and large institutions accumulate reserves.

“Gold needs to break through the $3,500 threshold to incentivize additional selling from existing holders and ease the current physical supply crunch,” the Citi report noted.

This structural imbalance is likely to continue in the near term, placing upward pressure on prices.

4. Broader Market Outlook: Gold Set to Stay in the Spotlight

Citi isn’t the only institution growing bullish on gold. Other financial heavyweights like JP Morgan, UBS, and HSBC have also raised their price targets for 2025, with some calling for a potential rally toward $3,600 per ounce.

Key reasons for the optimistic outlook include:

Geopolitical tensions, particularly between the U.S. and China

Unresolved inflation concerns in major economies

Expectations of monetary easing in the U.S. and Europe

A growing investor preference for defensive assets

With bond yields under pressure and equities facing headwinds, gold is increasingly being viewed as a hedge not just against inflation, but against uncertainty itself.

5. Implications for Vietnamese Investors

In Vietnam, domestic gold prices have soared in tandem with global trends. On April 17, SJC gold hit VND 118 million per tael, gaining VND 2.5 million in just under 24 hours—an all-time high.

Local investors should consider:

Monitoring global policy changes and U.S.–China trade developments closely

Watching for shifts in USD strength and Fed policy

Avoiding FOMO-driven purchases at local peaks and instead planning long-term entries

Conclusion

Citi’s upward revision of its gold forecast to $3,500/oz reflects a potent mix of Chinese institutional buying, global trade concerns, and physical market tightness. With gold continuing to assert itself as the ultimate safe-haven asset, the path forward appears golden for long-term investors.

As geopolitical tensions linger and macroeconomic volatility shows no sign of abating, gold remains well-positioned to shine brighter than ever in the remainder of 2025.

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