Is the gold price trend still bullish? The three major driving factors you should understand for 2025

After approaching a new high of $4,400 in October, gold prices have pulled back. But is this wave really over? Many investors are still on the sidelines, trying to understand the future trend of gold prices. Instead of passively waiting, it’s better to actively grasp the core logic driving gold prices—only by understanding the market’s “why it rises” can you see clearly whether “it will rise again.”

How fierce is this wave of gold price increase?

A set of data makes it clear. Between 2024 and 2025, the increase in gold prices is approaching the highest level in nearly 30 years, surpassing 31% in 2007 and 29% in 2010. This is not minor fluctuation but a genuine structural rise.

According to the World Gold Council (WGC) report, in Q3 2025, global net central bank gold purchases reached 220 tons, a 28% increase from the previous quarter; in the first nine months, total gold purchases were about 634 tons, indicating that central banks worldwide continue to prioritize gold reserves. This institutional-level buying directly influences the long-term direction of gold price trends.

The three core logics behind the gold surge

First: Policy uncertainty boosts safe-haven demand

A series of tariff policies after Trump’s inauguration became the direct trigger. The successive tariff measures created market uncertainty, rapidly boosting risk aversion. Historical experience shows that during similar periods of policy uncertainty (such as the US-China trade war in 2018), gold prices typically see a short-term surge of 5-10%. When investors face policy risks, the appeal of gold as a “safe haven asset” increases significantly.

Second: Continued expectations of Fed rate cuts

This is a key factor supporting the medium- to long-term trend of gold. When the Federal Reserve cuts interest rates, the US dollar weakens, and the opportunity cost of holding gold decreases, increasing its attractiveness. By analyzing historical gold prices, we find—gold prices are strongly negatively correlated with real interest rates: when rates fall, gold rises.

Real interest rate = Nominal interest rate – Inflation rate. The Fed’s rate cut policies directly influence nominal interest rates, so gold fluctuations are almost always closely tied to expectations and decisions regarding rate cuts. According to CME interest rate tools, the probability of the Fed cutting rates by 25 basis points at the December meeting is 84.7%. Such market expectations are crucial references for judging the trend of gold prices.

You might ask, why did gold fall after the FOMC meeting in September? Because a 25 basis point rate cut was fully in line with expectations and already priced in by the market. Plus, Powell described this rate cut as a “risk management” move, without signaling ongoing cuts, so the market became cautious about the pace of rate adjustments, leading to a pullback in gold prices after the surge.

Third: Strategic accumulation by global central banks

Major central banks are changing their asset allocations. The June 2025 central bank gold reserve survey by WGC shows that 76% of surveyed central banks expect their gold holdings to “moderately or significantly increase” over the next five years, while most expect the “US dollar reserve ratio” to decline. This signals an important trend: central bank-level funds are shifting from US dollars to gold, forming structural support.

What other factors are fueling the surge?

The global high-debt environment (reaching $307 trillion by 2025) limits the flexibility of national interest rate policies, with monetary policy leaning towards easing, indirectly boosting gold’s attractiveness. Declining confidence in the US dollar, geopolitical risks (Russia-Ukraine war, Middle East conflicts), and media and social media-driven short-term capital inflows are reinforcing this trend.

But it’s important to note that these factors may cause intense short-term volatility and do not necessarily indicate a sustained long-term trend.

How do expert institutions view the future of gold prices?

Despite recent fluctuations, institutions remain optimistic about gold’s long-term prospects.

JPMorgan’s commodities team considers this correction a “healthy adjustment,” raising their Q4 2026 target price to $5,055 per ounce. Goldman Sachs reiterates a target of $4,900 per ounce by the end of 2026. Bank of America remains optimistic, raising their 2026 gold target to $5,000 per ounce, with strategists even suggesting gold could challenge the $6,000 mark next year.

Leading jewelry brands’ reference prices for pure gold jewelry still stay above 1100 yuan/gram, with no significant decline, further confirming market recognition of gold’s long-term value.

Should you enter the market now?

It depends on your investment style and risk tolerance.

If you are a short-term trader, the volatility presents opportunities. The market liquidity is ample, and the direction of rise or fall is relatively easier to judge, especially during sharp surges or drops, where bullish or bearish momentum is clear. But this requires experience and emotional management. Beginners should start with small amounts, avoid blindly chasing highs, and refrain from repeatedly buying at high prices and selling at lows. Learning to use economic calendars to track US economic data can greatly improve trading decisions.

If you want to allocate physical gold for long-term preservation, be prepared for short-term fluctuations. Gold’s annual volatility averages 19.4%, not lower than stocks, and even the S&P 500’s average annual volatility is 14.7%. Gold’s cycle is very long; buying it for preservation requires a 10+ year horizon. During this period, prices could double or be cut in half. Physical gold trading costs are high—ranging from 5% to 20%—so it’s not advisable to buy excessively.

The most prudent approach is diversified allocation within your investment portfolio. Don’t put all your assets into gold; that’s not the smartest choice. If you want to maximize returns, you can hold long-term while timing short-term fluctuations, especially around US market data releases when volatility tends to increase. But this requires experience and risk control skills.

The key point is: the volatility of gold prices does not mean it has no opportunity. On the contrary, it offers operational space for prepared investors. But the premise is to avoid blindly following the trend and to have your own judgment and risk management plan.