Citi Cuts Gold Exposure Amid Hawkish Fed Outlook
Citi has reduced its gold holdings in its Global Multi-Strategy (GMS) portfolio and asset allocation following a shift in its outlook for Federal Reserve monetary policy.
The bank had previously added a long position in spot gold, anticipating that the Federal Reserve would adopt a more dovish policy stance and that the U.S. Treasury would announce a bond buyback program. These expectations were viewed as supportive catalysts for gold prices.
However, Citi changed its positioning following developments after the Jackson Hole symposium. A repricing toward a more hawkish Federal Reserve outlook, combined with rising energy prices, has altered the investment narrative surrounding gold.
Citi economists now expect interest rates to move higher, prompting the bank to reduce its exposure to the precious metal. The bank highlighted U.S. interest rates as a key driver of gold prices when explaining the change in its positioning.
The shift underscores how changing expectations for Fed policy and interest rates could continue to influence gold prices, particularly as investors reassess the outlook for monetary policy and inflation.