Gold Price Analysis 2025: From Safe-Haven to Allocation, Why Is Gold Trending Upward?

Over the past two years, the gold market has shown a strong upward trend. After reaching a record high of over $4,300 per ounce in October, gold prices experienced a pullback, but industry insiders view this correction as a healthy market adjustment rather than a trend reversal signal. According to Reuters data, the annual gains for gold between 2024 and 2025 are approaching the highest levels in nearly 30 years, surpassing 31% in 2007 and 29% in 2010.

Gold Price Analysis: Three Core Driving Factors

Policy Uncertainty and Safe-Haven Demand

Frequent changes in tariff policies have created an uncertain market environment. Historical data shows that during policy adjustments (such as during the 2018 trade friction period), gold typically experiences short-term gains of 5-10%. When risk aversion increases in the market, gold, as a traditional store of value, naturally becomes the preferred safe haven for funds.

Long-term Impact of Federal Reserve Interest Rate Policies

There is a clear negative correlation between expectations of Fed rate cuts and gold prices. Rate cuts tend to weaken the US dollar’s attractiveness and reduce the opportunity cost of holding gold. According to CME data, the market expects an 84.7% probability of rate cuts at the December meeting. By tracking changes in the Fed Funds futures (FedWatch), investors can better anticipate gold price movements. Real interest rates (nominal rate minus inflation) tend to decline as gold prices rise.

Continued Central Bank Gold Purchases

According to the World Gold Council report, global central banks net purchased 220 tons of gold in Q3 2025, a 28% increase from the previous quarter. Notably, 76% of surveyed central banks indicated they plan to increase their gold reserves over the next five years, while also expecting a decline in US dollar reserves. This long-term shift reflects a reassessment by central banks of gold as a “trust asset” globally.

Secondary Factors in Gold Price Analysis

Global debt levels continue to rise. According to IMF data, total global debt will reach $307 trillion by 2025. High debt environments limit countries’ monetary policy space and are more likely to promote monetary easing, which can lower real interest rates.

Reconsideration of the US dollar’s status is also playing a role. When the dollar is under pressure, gold priced in USD benefits and tends to attract international capital inflows.

Geopolitical situations (such as the Russia-Ukraine conflict and Middle East tensions) continue to provide support. In the short term, social media sentiment and continuous news coverage also drive rapid market capital flows, increasing volatility.

It is worth noting that for Taiwanese investors, gold priced in foreign currencies also requires consideration of USD/TWD exchange rate fluctuations, which can affect the final conversion gains.

How Professional Institutions View Gold Price Trends

Despite recent corrections, mainstream institutions remain optimistic about the medium- and long-term outlook for gold.

J.P. Morgan’s commodities team considers this correction a “healthy adjustment” and has raised its Q4 2026 target price to $5,055 per ounce.

Goldman Sachs maintains its target price of $4,900 per ounce by the end of 2026, holding a consistently optimistic market outlook.

Bank of America strategists are more aggressive; after raising their 2026 target price to $5,000 per ounce, they recently stated that gold could even challenge the $6,000 mark next year.

In the physical market, well-known jewelry brands such as Chow Tai Fook, Luk Fook Jewelry, Chao Hong Ji, and Chow Sang Sang in mainland China still quote pure gold jewelry at over 1100 RMB/gram, with no significant decline, reflecting stable market expectations for gold prices.

Investment Decisions Based on Gold Price Analysis: Different Strategies for Different Risks

For Experienced Short-term Traders

Volatile markets often provide abundant trading opportunities. The liquidity in the gold market is sufficient, especially during rapid rises or falls, where bullish and bearish forces are clearly visible. Keeping track of economic calendars and timely monitoring fluctuations around US economic data releases can significantly improve success rates.

For Novice Investors

If you want to participate in recent volatility, the primary advice is to start with small amounts. Avoid blindly increasing positions, as losing control of your mindset can lead to capital loss. Short-term trading requires a solid knowledge base and risk awareness.

For Long-term Physical Gold Holders

Entering the market now requires mental preparation and a willingness to withstand significant fluctuations. Gold’s average annual volatility is 19.4%, higher than the S&P 500’s 14.7%. While the long-term trend is positive, this process may include dramatic swings, such as doubling or halving. Additionally, transaction costs for physical gold typically range from 5% to 20%, so planning ahead is necessary.

For Portfolio Diversification Investors

Allocating gold in a portfolio is a reasonable diversification strategy but should be controlled in proportion to avoid over-concentration. Gold cycles tend to be long, often requiring a 10-year or longer time horizon to fully realize its preservation function.

For Investors Seeking Maximum Returns

A combined strategy of “long-term holding + short-term trading” can be considered. Based on long-term positions, short-term operations can leverage obvious fluctuations around US market data releases, but this requires strong experience and risk management skills.

Overall, the conclusion of gold price analysis points to: the fundamental outlook of gold as a global trust asset remains unchanged, with sufficient medium- and long-term support factors. However, short-term trading should be cautious of sharp volatility around US economic data and meeting announcements. Regardless of the strategy, diversification, position control, and rational decision-making are essential prerequisites.