How to layout gold investment in 2025? A comprehensive analysis of gold price outlook and risks

After reaching a historic high, the most pressing question for investors is—Will future gold prices continue to rise, or have they already peaked? Between 2024 and 2025, gold has performed strongly, with gains reaching nearly 30-year highs. However, as volatility increases, many are hesitant about entering the market again. To judge the future direction of gold prices, it’s essential to understand the core factors supporting this rally.

The Three Key Factors Driving the Surge in Gold Prices

Political policy uncertainty driving safe-haven demand

Since the implementation of the new U.S. administration’s policies, a series of tariff measures have introduced more variables into global markets. This policy uncertainty often triggers risk aversion among investors, and gold, as a traditional safe-haven asset, naturally becomes the preferred destination for capital. Historical data shows that during similar policy upheavals (such as the 2018 U.S.-China trade war), gold prices typically experience short-term surges of 5-10%.

Impact of interest rate expectations on gold attractiveness

The Federal Reserve’s monetary policy stance directly influences the strength of the dollar, which in turn affects gold’s investment appeal. When rate cut expectations rise, the opportunity cost of holding gold decreases, making gold relatively more attractive. According to CME interest rate tools, the probability of a 25 bps rate cut at the December Fed meeting is 84.7%.

Gold prices show a clear negative correlation with real interest rates—lower rates make gold more attractive. This explains why gold’s volatility almost always follows changes in Fed policy expectations. The brief correction after the September FOMC meeting was due to the rate cut of 25 bps being in line with expectations, offering no new surprises.

Central banks’ continued accumulation strategies

According to data from the World Gold Council (WGC), 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 bought approximately 634 tons, slightly below the same period in 2024 but still significantly higher than other periods.

More notably, in the WGC’s 2025 central bank gold reserve survey, 76% of respondents believe their gold holdings will be “moderately or significantly increased” over the next five years. Meanwhile, most central banks expect their dollar reserve ratio to decline, further reinforcing a long-term bullish outlook on gold.

Other Factors Supporting Future Gold Price Trends

In a high-debt global environment, governments face limited flexibility in interest rate policies. By 2025, global debt totals $307 trillion, which tends to promote accommodative monetary policies and suppress real interest rates.

Confidence in the dollar’s reserve currency status continues to decline, which is another key consideration. When the dollar faces depreciation pressures or market confidence wavers, gold priced in dollars benefits and tends to attract more capital inflows.

Additionally, geopolitical tensions—such as ongoing Russia-Ukraine conflicts and frequent Middle East clashes—heighten demand for safe-haven assets. Continuous media coverage and emotional narratives can also lead to short-term irrational capital inflows.

How Institutions View Future Gold Price Trends

Despite recent volatility, major international investment institutions remain optimistic about gold’s prospects:

J.P. Morgan Commodities Team considers the recent correction a “healthy adjustment,” raising their Q4 2026 target price to $5,055 per ounce.

Goldman Sachs reaffirms their end-2026 target of $4,900 per ounce, maintaining a cautiously optimistic stance.

Bank of America has a more aggressive outlook; after raising their 2026 target to $5,000, strategists recently indicated that gold could even break through the $6,000 mark next year.

Looking at actual jewelry market prices, well-known brands like Chow Tai Fook and Luk Fook Jewelry still quote pure gold jewelry prices in Mainland China above 1,100 RMB/gram, with no significant decline, reflecting market confidence in long-term gold value.

How Different Investors Can Participate

For experienced short-term traders

Volatility often presents the greatest opportunities. When liquidity is ample and price directions are relatively clear—especially during sharp surges or drops—momentum is obvious, making it suitable for bottom-fishing or quick trades. It’s recommended to use economic calendars to track U.S. economic data releases, as these key moments often bring the most intense price swings.

For novice investors

If you want to engage in short-term trading, remember three points: start with small amounts to test the waters, never blindly increase positions, and prevent emotional trading that leads to consecutive stop-losses. The most common mistakes among beginners are chasing highs and selling lows, which can wipe out capital after repeated operations.

For long-term holders

Investors planning to allocate physical gold for asset preservation should prepare psychologically. Although the long-term trend is upward, short-term fluctuations of over 30% are possible. The annual average volatility of gold is 19.4%, not lower than the S&P 500’s 14.7%. Gold’s cycle is very long; it may take over ten years to fully realize its hedging value, during which prices could double or be cut in half.

Additionally, transaction costs for physical gold are relatively high—generally between 5% and 20%—so it’s not advisable to allocate a large proportion of assets to it.

For asset allocators

Gold can be included in a diversified portfolio to spread risk, but it’s important to note that gold’s volatility is not lower than stocks. Putting all your funds into a single asset is unwise; a reasonable allocation ratio should be maintained.

Advanced strategy: combining long and short positions

To maximize returns, investors can hold long-term positions while capitalizing on short-term price movements, especially around key U.S. economic data releases. However, this requires a certain level of market experience and risk management skills.

Summary: Outlook for Future Gold Prices

Considering all factors, the support for future gold prices has not weakened. As a globally trusted reserve asset, gold still has room for long- to medium-term growth. However, in actual trading, short-term risks should be carefully managed, especially around U.S. economic data releases and major meetings.

The current gold market has not ended; both medium-term positioning and short-term participation remain viable opportunities. Nonetheless, avoid blindly following the trend. Investment decisions should be based on an understanding of market logic rather than emotional hype. Regardless of your chosen approach, always tailor your strategy to your risk tolerance and experience level.