2025 Gold Price Trend Analysis: Investment Opportunities and Risks Driven by Multiple Factors

The Story Behind Gold Reaching a New Historical High

From 2024 to 2025, international gold prices have shown an astonishing upward trend. After hitting a record high of $4,400 per ounce in October, despite a technical correction, market enthusiasm remains strong. According to Reuters, the gold price increase in 2024-2025 approaches the highest levels in the past 30 years, even surpassing the 31% surge in 2007 and the 29% in 2010. What are the underlying driving forces behind this extraordinary market rally?

Analysis of Gold Price Trends: Three Core Drivers

Tariff conflicts driving safe-haven demand

The series of tariff measures implemented after Trump’s policies directly triggered the rise of the gold market in 2025. The escalating US-China trade tensions and policy uncertainties significantly boosted risk aversion sentiment. Historical experience (such as during the 2018 trade war) shows that gold typically experiences a short-term increase of 5-10% during periods of policy uncertainty. Market participants increasingly view gold as an effective asset against uncertainty.

The Far-Reaching Impact of Federal Reserve Monetary Policy

Expectations of Fed rate cuts are another key factor supporting gold’s upward movement. Lower interest rates weaken the dollar, reducing the opportunity cost of holding gold, thereby increasing its relative attractiveness. According to CME interest rate tools, there is an 84.7% probability that the Fed will cut rates by 25 basis points at the December meeting.

It is noteworthy that gold prices show a clear negative correlation with real interest rates—a decline in rates means increased attractiveness of gold. Real interest rates are calculated as nominal rates minus inflation, and Fed policy adjustments directly influence this equation. Therefore, investors can track changes in Fed rate cut expectations to gauge the direction of gold prices.

Expansion of Central Bank Gold Reserves Globally

Data from the World Gold Council shows that in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter, with a total of approximately 634 tons bought in the first nine months. More revealingly, 76% of surveyed central banks indicated they plan to increase their gold reserves over the next five years, while most expect the proportion of US dollar reserves to decline. This shift by central banks reflects a reassessment of the dollar’s status and provides long-term support for gold prices.

Additional Factors Influencing Gold Price Trends

Besides the three main drivers above, the following factors also contribute to the rising market heat for gold:

Global debt crisis and inflation pressures: By 2025, global debt totals $307 trillion. High debt levels limit policy options for countries, leading to accommodative monetary policies, which suppress real interest rates and indirectly boost gold demand.

Gradual decline in confidence in the US dollar: When market confidence in the dollar wanes, gold, as a dollar-denominated asset, benefits and attracts continuous capital inflows.

Geopolitical tensions: Ongoing conflicts such as Russia-Ukraine and turmoil in the Middle East strengthen safe-haven demand, causing short-term volatility in gold prices.

Media and social media effects: Continuous news coverage and social media buzz lead to short-term capital inflows, further pushing prices higher.

Institutional Perspectives on Gold Price Trends

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

J.P. Morgan’s commodities team considers this correction a “healthy adjustment,” raising their Q4 2026 target price to $5,055 per ounce.

Goldman Sachs maintains an optimistic stance, reaffirming their end-2026 target of $4,900 per ounce.

Bank of America shows a more aggressive outlook, raising their 2026 target to $5,000 per ounce, with strategists recently suggesting gold could break through $6,000 next year.

Local jewelry brands such as Chow Tai Fook, Luk Fook Jewelry, Chao Hong Ji, Chow Sang Sang, etc., maintain reference prices for pure gold jewelry at 1,100 RMB/gram or above, with no obvious decline, reflecting continued market bullishness.

Risks and Opportunities for Retail Investors

Different Investor Strategies

Short-term traders: For experienced speculators, current volatility offers abundant trading opportunities. In a liquid environment with relatively clear directions, short-term gains are more accessible. Beginners should exercise caution, start with small positions, and avoid over-leveraging to prevent emotional distress.

Long-term holders: Investors planning to buy physical gold for long-term storage should be prepared for potential medium-term fluctuations. Although the overall trend is upward, sharp swings test investors’ psychological resilience.

Portfolio allocators: Including gold in a diversified portfolio is a reasonable choice, but over-concentration should be avoided. Gold’s volatility is comparable to stocks, with an average annual amplitude of 19.4% (versus 14.7% for the S&P 500). All-in positions are not advisable.

Key points to watch when analyzing gold price movements:

1. Volatility is significant: Gold’s average annual amplitude of 19.4% indicates high fluctuation strength, comparable to equities.

2. Time horizon test: Gold’s value preservation should be assessed over a 10+ year period, during which prices may double or halve. Patience and discipline are crucial.

3. Trading costs: Physical gold transactions generally incur costs of 5%-20%, which directly erode returns.

4. Hidden risks of USD exchange rates: For Taiwanese investors, fluctuations in USD/TWD will affect the final returns when denominating gold in foreign currency.

5. Impact of US economic data: Especially around key economic releases and Fed meetings, volatility often amplifies. Risk management should be prepared in advance.

Conclusion

As a reserve asset with “global trust” characteristics, gold’s long-term price support remains solid. The current gold market is not over yet; both medium- and long-term allocations and short-term trading opportunities exist. However, caution is necessary regarding short-term volatility. New investors should avoid blindly chasing high prices and instead base decisions on rational analysis and risk assessment. Regardless of strategy, diversification and risk control are always the foundation of steady profits.