Can gold prices still rise in this wave? A comprehensive analysis of gold price trends in 2025

Why Have Gold Prices Risen So Much?

Since the end of 2024, the international gold market has been in the spotlight. From hitting a historic high of $4,400 per ounce in October to subsequent fluctuations, this rally has set nearly a 30-year record—2024-2025 gold gains approaching the highest levels in nearly three decades, surpassing 2007’s 31% and 2010’s 29%.

But what truly piques curiosity is: What is driving gold prices higher and higher?

The Three Main Drivers of Gold Price Increase

Uncertainty from Tariff Policies

Entering 2025, a series of tariff policies have raised market alertness. When policy environments are full of variables, safe-haven demand emerges. Based on historical experience, during the US-China trade friction in 2018, gold prices saw short-term increases of 5-10% amid policy uncertainty. The current situation is no different—market insecurity has boosted demand for traditional safe-haven assets like gold.

Adjustments in Rate Cut Expectations

The Federal Reserve’s monetary policy directly influences gold’s investment appeal. When interest rates fall, the opportunity cost of holding gold decreases, and its relative yield improves. The underlying logic is that real interest rates and gold prices are negatively correlated—lower interest rates make gold more attractive.

Interestingly, after the FOMC meeting in September, gold prices retreated, not because of rate cuts per se, but because the market’s expectation of “continued rate cuts” was shattered. Powell characterized that rate cut as a “risk management” move, without clarifying future policy directions, leaving investors cautious about the outlook.

According to CME interest rate tools, the probability of the Fed cutting rates by 25 basis points again at the December meeting is as high as 84.7%. Such data changes often serve as important references for predicting gold trends.

Continued Central Bank Purchases

According to the latest statistics 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 of gold.

More notably, in the WGC’s survey, 76% of responding central banks indicated they plan to increase gold reserves over the next five years, while most expect the US dollar reserve ratio to decline. This long-term allocation trend provides a solid demand foundation for gold.

What Other Factors Are Contributing?

Policy Dilemmas in a High-Debt Environment

By 2025, global debt totals $307 trillion. High debt levels limit central banks’ policy flexibility, leading to continued loose monetary policies, which directly suppress real interest rates and indirectly support gold prices.

Confidence in the US Dollar Wavers

When the dollar weakens or market confidence drops, gold priced in USD becomes a safe haven. Capital flows into gold tend to intensify during such periods.

Geopolitical Uncertainty

The ongoing Russia-Ukraine conflict, tensions in the Middle East—these factors continue to boost the appeal of safe assets, driving up gold demand.

Self-Reinforcing Market Sentiment

Intensive media coverage, social media hype, retail investors’ herd behavior—these create a short-term self-reinforcing rally. However, caution is advised, as such volatility often does not reflect long-term trends.

How Do Institutions View Gold’s 2025 Outlook?

Despite recent corrections, professional institutions remain optimistic.

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

Goldman Sachs reaffirmed its end-2026 target at $4,900 per ounce, maintaining a positive long-term outlook.

Bank of America’s forecast is more aggressive; previously raising its 2026 target to $5,000 per ounce, it recently stated that gold could surge to $6,000 next year.

From the spot market perspective, well-known jewelry brands like Chow Tai Fook and Luk Fook Jewelry still quote pure gold jewelry at over 1100 RMB/gram, with no significant decline, reflecting market confidence in gold’s medium-term prospects.

Entering the Market Now: Risks and Opportunities

Understanding the logic behind this rally, many investors face the question: Is it still a good time to buy?

For Experienced Short-term Traders

Volatility provides opportunities to leverage technical analysis. With ample liquidity and relatively clear directional movement, especially during sharp rises or falls, the forces of bulls and bears become obvious. Skilled traders who can grasp the rhythm have many chances.

For New Investors

Proceed with caution. Gold’s volatility is comparable to stocks—an average annual amplitude of 19.4%, not inferior to the S&P 500’s 14.7%. Blindly chasing highs, buying at peaks, or selling at lows can severely erode capital over multiple trades. It’s recommended to start with small amounts, learn to track US economic data releases via economic calendars, and use them as references for trading decisions.

If You Want to Hold Physical Gold Long-term

First, be mentally prepared for potential sharp fluctuations. Gold’s cycle is very long; it can take over ten years to fully realize its hedging function, but during that period, it could double or be cut in half. Second, physical gold has higher transaction costs (usually 5-20%), so large one-time investments are not advisable.

Ideal Allocation Strategy

Incorporating gold into a diversified investment portfolio is a more rational approach. It can be held long-term for asset preservation or used for short-term trading during significant price swings—especially around US market data releases, where volatility tends to be most pronounced. However, this requires some market experience and risk management skills.

Key Points to Remember

• Gold’s price movements are more volatile than stocks; be prepared for short-term fluctuations.
• Physical gold trading costs are high; frequent trading can eat into profits.
• No matter how strong your conviction in gold’s outlook, don’t put all your funds into a single asset; diversification remains the safest approach.

The medium- and long-term support factors for gold prices still exist, but short-term risks—especially around major economic data and meetings—must be carefully watched.