By Senad Karaahmetovic

A senior commodities strategist at Citi is less and less convinced in the bank’s base-case scenario that Gold prices will bottom in September and October.

The strategist sees futures averaging ~$1,740/oz in Q3 this year while the firm’s bear-case scenario calls for $1,650/oz, just ahead of the big technical support near $1,600/oz.

“We still think bullion markets will bottom during September/October and prices can average $1,775/oz in 4Q’22, although we hold low conviction in this baseline outlook. We see moderate downside risk in the short-term given aggressive front-end pricing for US policy rates, the back-up in medium-term real Treasury yields, and bearish gold vol skew,” the strategist said in a client note.

Although gold prices could eventually rebound to $1,700/oz, the strategist sees low chances that a bullish run to $1,900+ may take place, at least not until later in 2023.

Moreover, the strategist also notes GDP headwinds in China and higher import taxes in India that may weigh on the demand, although central bank demand is still a “positive.”

“Seasonally, retail gold consumption is usually buttressed in 4Q,” the Citi strategist concluded.

As of 09:00 EST (13:00 GMT), gold prices are trading at $1,675 per ounce.