After a bright start in 2016, aided by a hefty bout of "risk-off" sentiment in global markets, analysts at Citi have played down the possibility of a sustained rally in gold.
The bank predicts that current price momentum for bullion may begin to ease after the current quarter and sees a sustained rally in oil prices having the potential to become more negative for gold later this year.
"Prices could test $1,300 a troy ounce should global growth concerns dominate headlines but our base case gold outlook is for prices to eventually head below $1,200 an ounce (in the second half of the year)," a team of analysts, headed by Edward Morse, said in a quarterly report published Monday but released to the media after a client call on Wednesday.
"We moderate the price outlook into 2017. A sustained oil price recovery could boost sentiment on equities, (emerging market currencies), macro sentiment and possibly cause a reversal in the strong safe-haven bid for gold that has dominated (first half) trading."