What is the outlook for gold prices in 2025? When will gold prices fall, and what is the subsequent trend analysis?

Recently, the gold market has been buzzing with activity. From the end of last year to mid-2025, international spot gold XAUUSD has broken through the $4,400 per ounce mark, creating a rare single-year surge in the past 30 years. How much further can this rally go? When will gold prices fall? Many investors are asking themselves these questions.

To understand the current strong performance of gold, we must first clarify the underlying market logic.

Why Can Gold Keep Rising? Three Major Drivers Are Working Behind the Scenes

This upward channel in gold prices is not coming out of nowhere but is the result of multiple factors stacking up.

First is the escalation of geopolitical and policy uncertainties. In early 2025, a series of tariff policies were introduced, directly triggering a significant increase in market risk aversion. Historical experience shows that whenever there are major policy changes, gold, as the most traditional safe-haven asset, tends to see capital inflows. Similar to the US-China trade war in 2018, gold prices surged by 5-10% in the short term. In the current environment, similar logic is playing out again.

Second, expectations of Federal Reserve monetary policy continue to guide gold price trends. Gold prices have a significant inverse relationship with real interest rates. According to CME interest rate tools, there is an 84.7% chance that the Fed will cut interest rates by 25 bps at the December meeting. Each rate cut tends to lower real interest rates (= nominal interest rate - inflation rate), thereby increasing gold’s attractiveness. Investors can monitor changes in the FedWatch tool to anticipate potential gold price fluctuations.

Third, the demand for gold reserves from major central banks supports prices. The World Gold Council’s latest data shows that, in the first three quarters of 2025, global central banks net purchased about 634 tons of gold. Notably, in the council’s survey, 76% of responding central banks indicated they plan to increase the proportion of gold in their reserves over the next five years, while most expect the US dollar reserve ratio to decline. This long-term trend provides a durable demand foundation for gold.

Why Is Gold Price Staying Strong? Other Factors Are Also at Play

In addition to the three core drivers above, the current global economic environment is also subtly supporting gold prices.

According to IMF data, by 2025, global debt has reached approximately $307 trillion. Such a massive debt scale limits the policy space of central banks worldwide, forcing monetary policy to remain accommodative, which indirectly lowers real interest rates and further enhances the relative value of the interest-free asset, gold.

Meanwhile, declining confidence in the US dollar is also pushing up gold prices. When the dollar faces depreciation pressure or market confidence is shaken, gold priced in USD tends to benefit and attract substantial capital inflows.

Furthermore, ongoing geopolitical risks such as the Russia-Ukraine conflict and tense Middle East situations continue to boost demand for safe-haven assets. Continuous media reports and social sentiment amplification create additional capital inflows in the short term.

It’s important to note that these short-term factors, while capable of causing sharp volatility, do not necessarily indicate a long-term trend. For Taiwanese investors, gold priced in foreign currencies also requires consideration of USD/TWD exchange rate fluctuations, which can significantly impact actual returns after conversion.

How High Will Gold Prices Rise in 2026? Summary of Institutional Forecasts

Despite recent technical adjustments, the market remains generally optimistic about long-term gold prospects. JPMorgan’s commodities analysis team characterizes this correction as a “healthy technical correction,” and has raised its Q4 2026 target price to $5,055 per ounce.

Goldman Sachs maintains its previous optimistic stance, with a target price of $4,900 per ounce by the end of 2026. Bank of America is more aggressive, having previously raised its target to $5,000, and recently some strategists have suggested gold could even hit $6,000 next year.

On the retail side, well-known jewelry brands (such as Chow Tai Fook, Luk Fook, Chao Hong Ji, etc.) continue to quote reference prices for pure gold jewelry above 1100 TWD/gram, with no obvious decline, indirectly confirming market confidence in gold prices.

All these signals suggest that gold, as a globally trusted reserve asset, still has strong long-term support. However, investors must be cautious of short-term risks, especially around US economic data releases or Federal Reserve meetings, when gold prices tend to fluctuate more noticeably.

Is Now a Good Time to Enter? Different Investors’ Choices

Regarding when gold prices will fall, the answer depends on your investment time horizon.

If you are an experienced short-term trader, the current volatile environment creates many opportunities. In a highly liquid gold market, the direction of movement is relatively easier to judge, especially during sharp surges or drops, where bullish and bearish forces are clear. Tracking key US economic data through economic calendars can effectively assist trading decisions.

If you are a novice trying to participate in short-term trading, remember to start with small capital to test the waters. Chasing highs and selling lows frequently is a common trap for beginners, and losing your nerve can lead to significant losses.

If you plan to buy physical gold as a long-term allocation, be prepared for larger fluctuations. The average annual volatility of gold is 19.4%, higher than the S&P 500’s 14.7%. Additionally, transaction costs for physical gold typically range from 5% to 20%, which must be considered before entering.

For portfolio allocation, gold is indeed a valuable diversification tool, but should not be the sole focus. A wiser approach is to hold long-term positions while using short-term price fluctuations to enhance returns, which requires sufficient experience and risk management skills.

One notable phenomenon is that gold’s investment cycle is unusually long. Buying gold as a hedge may yield expected returns over a 10-year horizon, but within that decade, it could double or be cut in half. This underscores the importance of diversification and controlling the proportion of a single asset in your portfolio.

In summary, the current gold market has not ended; both medium- and long-term opportunities remain. However, it is crucial to develop strategies aligned with your risk tolerance based on a thorough understanding of market logic, rather than blindly following trends.