Citi say short gold is still an appropriate pain trade

 New York (Oct 26)  Investment bank Citi says it is still sticking with the 'short gold' as appropriate pain trade over medium-term. Analysts at the bank note, that being short gold is the appropriate 'pain trade' despite "tangible" upside risks to their fourth-quarter 2021 average spot price forecast of $1,700/oz.

It has to be said that Citi defined medium-term as being the back half of 2022 and 2023. In the banks opinion, that was exactly what financial outflows were signalling, notwithstanding the stabilisation in prices between $1,750-1,800/oz. seen quarter-to-date.

Among the listed factors that might lie behind weaker bullish sentiment towards, particularly versus 2019 and 2020, were the bottoming of TIPS yields in the belly of the curve, more aggressive Fed pricing in STIR markets coupled with a stronger US dollar and inflows into crypto assets.

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