2025 Gold Price Trend Analysis: Future Direction of Gold Prices Based on Safe-Haven Demand

In recent months, gold market trends have sparked widespread discussion. From reaching a historic high of $4,400 per ounce in October to subsequent technical adjustments, the market has been filled with various voices: Will gold continue to rise? Is it too late to enter now? Instead of blindly following the trend, it’s better to understand the logic behind gold price movements.

Why is gold entering a long-term upward cycle in 2024-2025?

According to Reuters data, the gold price has increased nearly 30 years’ worth of gains during 2024-2025, surpassing the 31% rise in 2007 and the 29% in 2010. This is not a coincidence but the result of multiple factors stacking up.

First, macroeconomic uncertainty is driving safe-haven demand higher.

Policy changes directly impact market sentiment. Entering 2025, a series of tariff policies have increased economic outlook uncertainties, significantly boosting risk aversion. Historical experience (referencing the 2018 US-China trade war) shows that during periods of policy uncertainty, gold often experiences short-term gains of 5-10%. Additionally, ongoing conflicts such as Russia-Ukraine and tensions in the Middle East continue to elevate geopolitical risks, further increasing the safe-haven appeal of precious metals.

Meanwhile, global debt has reached $307 trillion (IMF data), and high debt levels limit countries’ flexibility in interest rate policies. Central banks tend to adopt more accommodative monetary policies, which directly suppress real interest rates. The relationship between real interest rates and gold prices is inverse—lower interest rates increase gold’s attractiveness.

Second, the Fed’s rate cut expectations are a key support for gold prices.

After the September FOMC meeting, the market briefly doubted the outlook for gold. At that time, a 25 basis point rate cut by the Fed was in line with expectations, but this also meant the market had fully priced in this information. Moreover, Powell characterized this as a “risk management rate cut” rather than a signal of ongoing rate cuts, leading investors to adopt a wait-and-see attitude, causing gold prices to retreat.

However, over a longer cycle, a rate cut environment remains bullish for gold. Fed policy adjustments directly influence nominal interest rates, while real interest rates = nominal interest rate - inflation rate. This explains why gold price fluctuations closely follow rate cut expectations. According to CME FedWatch data, the probability of the Fed cutting rates by 25 basis points in December is 84.7%, providing medium-term support for gold.

Third, ongoing central bank gold purchases reflect long-term confidence in gold.

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 of 2025, central banks accumulated about 634 tons of gold, slightly below the same period in 2024 but still significantly higher than other periods. Notably, in the WGC’s survey of central bank gold reserves, 76% of respondents expect to increase gold’s share in their reserves over the next five years, while expecting the dollar’s reserve share to decline. This structural shift is supporting long-term gold demand.

Other factors driving gold price trends

Besides the main drivers above, several other factors continue to influence gold prices:

Dollar confidence weakening. When the dollar weakens or market confidence in it declines, gold priced in dollars benefits, attracting more capital inflows.

Media and social platform sentiment. Continuous news coverage and social discussions reinforce market psychology, leading to short-term capital inflows and creating the illusion of sustained upward momentum.

Physical demand support. Domestic jewelry brands’ reference prices for pure gold jewelry remain above 1100 RMB/gram, indicating that physical gold market purchasing power has not significantly shrunk despite high prices.

It is important to note that these short-term factors may cause sharp volatility but do not necessarily indicate a long-term trend. Investors need to distinguish between short-term risks and medium-term opportunities.

How do institutions view gold price trends?

Despite recent technical adjustments, major financial institutions remain optimistic about gold’s long-term prospects:

• J.P. Morgan’s commodities team considers this correction a “healthy adjustment,” and after warning of short-term risks, maintains a bullish outlook long-term, raising the Q4 2026 target price to $5,055 per ounce.

• Goldman Sachs maintains a target of $4,900 per ounce by the end of 2026, with a consistent optimistic stance.

• Bank of America raises its 2026 gold target price to $5,000 per ounce, with strategists even suggesting gold could hit $6,000 next year.

The commonality among these forecasts is that, although short-term fluctuations exist, the fundamental factors supporting long-term gold appreciation remain unchanged.

Different investor gold allocation strategies

For experienced short-term traders

Volatile markets offer abundant trading opportunities. Market liquidity is ample, and the direction of price movements during sharp rises or falls is relatively easier to judge. Using economic calendars to track US data releases can help effectively capture pre-market and post-market volatility. However, it should be emphasized that short-term trading requires high risk control and strong psychological resilience.

For novice investors entering the market

If you want to participate in recent fluctuations, start with small amounts and avoid blindly increasing positions. Gold’s annual volatility averages 19.4%, higher than the S&P 500’s 14.7%, so its volatility should not be underestimated. A poor mindset can lead to significant losses. Also, be aware that physical gold transactions involve costs of 5%-20%, which are relatively high.

For long-term asset allocators

If planning to hold gold long-term, be prepared for significant fluctuations. While the long-term bullish logic is sound, intermediate periods may see prices doubling or halving. Gold’s cycle is very long; only over a decade or more can its value-preserving function be fully realized. Additionally, gold’s volatility is not lower than stocks; putting all funds into gold is unwise. Diversification is more prudent.

For investors seeking maximum returns

Consider holding long-term while capitalizing on price swings for short-term gains. Especially around US market data releases, volatility often amplifies, providing additional profit opportunities. However, this requires sufficient experience and risk management skills.

Overall advice

The upward momentum of gold prices remains intact, offering opportunities in both medium and short term. The key is to avoid blindly following the trend—especially in volatile markets, where chasing high or cutting low repeatedly can wipe out your account.

Remember three points:

1. Gold remains a globally trusted reserve asset with unchanged medium- and long-term support factors.
2. Short-term volatility risks should not be underestimated, especially around US economic data and meetings.
3. Proper allocation is essential; avoid putting all your eggs in one basket.

The future direction of gold prices depends on multiple factors such as rate cut pace, geopolitical developments, and central bank policies. Thorough research before investing is far more valuable than following the crowd.