Analysis of Gold Price Trends in 2025: A Must-Read Guide for Investors

Entering 2024–2025, the global economic landscape remains unpredictable, and Gold Price Analysis once again becomes a market focus. After reaching a historic high of $4,400 per ounce on October 20, followed by a correction, investment enthusiasm remains strong. Many people share the same question: Will gold rise again? Is it too late to enter now? To answer these questions, a deep understanding of the core logic behind gold price fluctuations is essential.

Why is XAU/USD experiencing a strong upward trend?

Over the past 24 months, the gold market has performed remarkably. According to Reuters statistics, the gold price increase for 2024–2025 has approached the highest levels in nearly 30 years, surpassing the 31% rise in 2007 and the 29% in 2010. Behind this rally, three main forces are driving:

First Force: Safe-haven demand triggered by trade policy changes

At the start of the new government, a series of tariff measures were introduced, increasing market uncertainty and sparking risk aversion sentiment. Capital flowed into traditional safe-haven assets like gold. Based on historical experience (such as the US-China trade friction in 2018), similar policy environments typically push gold prices up by 5–10% in the short term.

Second Force: Federal Reserve monetary policy expectations

The Fed’s interest rate cuts directly influence the strength of the US dollar. When the Fed implements rate cuts, the opportunity cost of holding dollar-denominated gold decreases, making gold more attractive. If economic prospects weaken, the pace of rate cuts may accelerate, further supporting gold.

According to CME FedWatch data, the probability of a 25 basis point rate cut in December is as high as 84.7%. Gold prices have an inverse relationship with real interest rates: when rates fall, gold usually rises. This is because real interest rates equal nominal rates minus inflation; when nominal rates decline, gold, which does not pay interest, becomes more appealing.

Third Force: Global central banks continuously increasing gold reserves

According to 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 three quarters, total gold purchases reached about 634 tons, slightly below the same period in 2024 but still well above historical norms.

More notably, WGC’s mid-year survey indicated that about 76% of surveyed central banks plan to increase their gold reserves over the next five years, while most expect to reduce their dollar reserves. This reflects a clear boost in global confidence in gold as a “hard asset.”

Supporting factors boosting gold prices

In addition to the core drivers above, the following factors should not be overlooked:

High global debt and slowing economic growth

By 2025, global debt totals $307 trillion. Elevated debt levels constrain the flexibility of interest rate policies worldwide. Central banks tend to adopt relatively loose monetary policies, putting downward pressure on real interest rates and strengthening long-term support for gold prices.

Decline in US dollar confidence index

When the dollar faces depreciation pressure or market confidence wanes, gold priced in dollars benefits, with international capital flowing in more rapidly.

Geopolitical conflicts increasing hedging demand

The ongoing Russia-Ukraine war, tensions in the Middle East, and other geopolitical uncertainties stimulate risk aversion, often triggering a surge in gold demand in the short term.

Social media effects amplifying short-term volatility

Continuous news coverage and social media discussions drive short-term capital inflows, pushing gold prices higher in succession.

How do market institutions view the gold outlook?

Despite recent corrections, many leading institutions remain optimistic about gold’s medium- and long-term prospects:

J.P. Morgan Commodity Research considers this correction a healthy technical adjustment, raising its Q4 2026 gold target price to $5,055 per ounce.

Goldman Sachs maintains its previous outlook, reaffirming a target of $4,900 per ounce by the end of 2026.

Bank of America is more bullish, raising its 2026 gold target to $5,000 per ounce, with strategists further suggesting that gold could even hit $6,000 next year.

Local jewelry retailers (such as Chow Tai Fook, Luk Fook Jewelry, etc.) still quote stable prices for pure gold jewelry above NT$1,100 per gram, with no obvious decline, reflecting continued confidence in gold’s value at the retail level.

How should retail investors respond at this stage?

Understanding the logic behind this rally allows investors to formulate more rational strategies. Gold Price Analysis indicates that the current rally has not yet ended; both medium-term positioning and short-term trading opportunities still exist. However, the key is to avoid blindly following the trend.

Recommendations for different investors:

• If you are an experienced short-term trader, the volatility provides excellent trading opportunities. Market liquidity is ample, and price directions are relatively clear. During big swings, the forces of bulls and bears are distinct, offering relatively abundant profit opportunities.

• If you are a novice entering the market, aiming to capitalize on recent fluctuations, remember: start with small amounts, do not blindly increase positions, and avoid emotional trading that could lead to larger losses. Use economic calendars to track US economic data releases to assist decision-making.

• If you plan to hold physical gold as a long-term asset, prepare psychologically for potential large fluctuations. Although the long-term trend is upward, assess in advance whether you can withstand significant interim volatility.

• If your goal is portfolio optimization, gold is certainly an option, but do not allocate all your assets to it. Gold’s volatility is comparable to stocks; diversification remains a more prudent strategy.

• If you seek maximized returns, consider combining long-term holdings with opportunistic short-term trades, especially around US economic data releases, where volatility tends to be most intense. This requires a certain level of trading experience and risk management skills.

Key data to know before investing:

Gold’s annual volatility averages 19.4%, higher than the S&P 500’s 14.7%, indicating notable risk.

Gold’s investment cycle is very long; holding for over 10 years is generally necessary to achieve stable preservation and appreciation, but within that period, prices may double or halve.

Physical gold trading costs are relatively high, typically between 5% and 20%, which should be factored into costs.

Additionally, Taiwanese investors trading dollar-denominated gold should consider USD/TWD exchange rate fluctuations, which can impact actual returns—often overlooked by beginners.

Overall, Gold Price Analysis combining multiple factors suggests that the medium- and long-term upward logic remains valid. However, short-term risks and volatility, especially around key economic data releases or policy meetings, should be carefully monitored. Rational analysis, appropriate allocation, and risk control are the hallmarks of smart investing.