2025 Gold Price Outlook: Is There Still Room for Price Increase?

Entering 2024–2025, the global economic landscape remains unpredictable, and gold has once again become a market focus. After reaching a historical high of $4,400 per ounce on October 20, there was a pullback, but investment enthusiasm remains strong. Many market participants are pondering the same question: Will the future trend of gold continue its upward momentum? Is it too late to enter now?

To forecast the direction of gold prices, it is essential to understand the underlying logic influencing gold valuation. This article will analyze three core drivers, institutional forecasts, and practical investment strategies.

The Three Main Drivers Behind the Skyrocketing XAUUSD Price

Driver One: Safe-haven demand driven by trade policy uncertainty

The implementation of Trump’s policy framework, especially the frequent adjustments to tariffs, has directly triggered market concerns about economic prospects. Historical experience shows that during the US-China trade friction in 2018, gold prices rose by 5–10% in short periods of policy uncertainty. Similar policy risk environments re-emerged, significantly boosting risk aversion sentiment, with large capital inflows into the gold market.

Driver Two: Expectations of Federal Reserve interest rate policies

The Fed’s rate cut decisions have a decisive impact on gold’s attractiveness. When rate cut expectations rise, the US dollar tends to weaken, reducing the cost of holding gold priced in dollars, thus pushing gold prices higher. The mechanism behind this is: Real interest rate = Nominal interest rate – Inflation rate; the lower the real interest rate, the more attractive gold as a non-yielding asset becomes.

According to CME interest rate tools, the probability of the Fed cutting rates by 25 basis points at the December meeting is 84.7%. Past gold price trends have shown that any subtle change in market expectations of Fed policy is directly reflected in gold prices.

Driver Three: Continued increase in global central bank gold reserves

Data from the World Gold Council (WGC) shows that in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. In the first nine months, central banks accumulated about 634 tons of gold, slightly lower than the same period last year but still at a high level.

More notably, the WGC’s 2025 central bank gold reserve survey reveals an important trend: 76% of surveyed central banks expect to increase their gold holdings as a proportion of total reserves over the next five years, while most anticipate a decline in dollar reserves. This reflects a rising demand for diversified reserve assets in the global financial landscape.

Other Factors Supporting Continued Gold Price Growth

Besides the three main drivers, the following factors also contribute:

High global debt and limited room for rate policy adjustments

According to IMF data, by 2025, global debt has reached $307 trillion. High debt levels mean central banks lack flexibility to raise interest rates, favoring an overall accommodative monetary policy. Low interest rates directly lower real interest rates, enhancing gold’s relative attractiveness.

Questions over the US dollar’s reserve currency status

When the dollar’s purchasing power faces inflation erosion and market confidence in its long-term value wanes, gold, as a traditional store of value, gains favor. Capital shifts from the dollar to gold, further boosting gold prices.

Geopolitical tensions

Ongoing Russia-Ukraine conflict and instability in the Middle East increase market demand for safe assets. Gold’s status as the ultimate safe haven remains unshaken.

Social media and media effects

Chain reactions of news reports and emotional resonance on social platforms attract a large number of retail funds into the gold market indiscriminately, forming a short-term self-reinforcing surge.

It is important to note that these short-term factors may trigger intense volatility but do not guarantee a sustained long-term trend. For Taiwanese investors, since gold is priced in USD, fluctuations in USD/TWD exchange rates will additionally impact final returns.

Institutional Views on the Future of Gold

Despite recent corrections in gold prices, international investment banks remain optimistic about its medium- and long-term prospects:

JPMorgan Commodity Division: Views this correction as a “healthy correction,” acknowledging short-term risks but confident in the long-term trend, raising the Q4 2026 target price to $5,055 per ounce.

Goldman Sachs: Maintains an optimistic stance, reaffirming a target of $4,900 per ounce by the end of 2026.

Bank of America Merrill Lynch: Takes the most aggressive forecast, previously setting a 2026 target at $5,000 per ounce, and recently stating that gold could break $6,000 next year.

Performance of spot retail: Well-known jewelers such as Chow Tai Fook, Luk Fook, Chow Sang Sang, and Chow Tai Seng continue to quote pure gold jewelry in mainland China at over 1,100 RMB/gram, with no obvious decline, reflecting market confidence in long-term gold prices.

Practical Investment Advice for Retail Investors

After understanding the supporting logic behind gold’s future trend, investors should formulate strategies based on their own conditions. Here are some reference options for different investor types:

Short-term traders: The current volatile market creates good opportunities for short-term operations. Liquidity is ample, price movements are relatively predictable, especially during sharp surges or drops, with clear momentum for bulls and bears. Experienced traders can fully leverage these opportunities. Beginners should be cautious, start with small amounts, and avoid blindly chasing highs, as this risks being trapped at high levels. Using economic calendars to track US economic data can significantly improve trading success rates.

Long-term allocators: If planning to buy physical gold for long-term holding, be prepared for significant fluctuations. Gold’s annual average volatility is 19.4%, higher than the S&P 500’s 14.7%. Additionally, physical gold trading costs are high—ranging from 5% to 20%—making frequent trading unsuitable.

Portfolio diversifiers: Gold can be part of an asset allocation but should not be the sole focus. Over-concentrating funds in a single asset violates diversification principles. Gold holdings are typically long-term; only over ten years can they truly preserve and grow value, with potential doubling or halving along the way.

Balanced long- and short-term strategies: Investors can maintain long-term positions while using price fluctuations (especially around US economic data releases) for short-term trades to maximize gains. This approach requires market experience and strict risk management.

Summary: Judging the Future of Gold

Combining expectations of Fed policy, central bank reserve trends, geopolitical landscape, and debt levels, gold still has upward potential. As a reserve asset trusted globally, the medium- and long-term support for gold remains robust.

However, in actual trading, caution must be exercised regarding short-term volatility, especially ahead of key US economic data and policy meetings. The future of gold is upward, but the journey will not be smooth. Investors need patience and risk awareness.