Investing.com – Gold has taken a breather Tuesday after climbing over the past couple of weeks to record highs as safe haven demand remained underpinned by concerns over worsening geopolitical tensions, and Citi sees the potential for $3,000 an ounce.

AT 10:05 ET (14:05 GMT), traded 0.5% lower at $2,370.27 an ounce, remaining close to Friday’s record high of $2,431.53 an ounce.

The yellow metal’s recent run-up was driven largely by worsening geopolitical tensions in the Middle East, after Iran attacked Israel over the weekend.  

An all-out war between the two countries could potentially draw in other Middle Eastern powers, as well as the U.S. and its allies. 

Fears of such a scenario fueled demand for gold, which is seen as a traditional safe haven for its relative price stability, especially in times of global strife.

The yellow metal was also supported by central bank buying over the past year, especially in emerging markets, amid growing fears of a global economic downturn in 2024.

“The recent gold rally has been aided by geopolitical heat and is coinciding with record equity index levels; so a steeper risk-off environment should further boost prices,” said analysts at Citi, in a note, dated April 15. 

“More importantly, the bullion complex has de-coupled from US rates and the US dollar, suggesting robust physical consumption drivers (eg, India/China imports, bar/coin), alt-fiat demand, geopolitical hedging, and CB buying are supporting the market.”

The bank has lifted its baseline gold price forecasts to the bull-case scenario, and for 2024 this means a 6.8% bump to $2,350/oz; for 2025E, this means an admittedly massive 40% upward revision to $2,875/oz. 

“We project $3,000/oz gold over the next 6-18m, which is c20% above the forwards and 25%+ north of spot. We expect trading to regularly test and breach $2,500/oz in 2H’24,” the bank added.