What will be the trend of gold in 2025? Can we still chase this wave?

Gold prices have been booming for an entire year. Since 2024, XAUUSD has continuously hit new all-time highs, with the gains in 2024-2025 approaching the highest levels in nearly 30 years, surpassing 31% in 2007 and 29% in 2010. As it neared $4,400 per ounce in mid-October, the market began to adjust, but there are still many voices optimistic about the future.

The question is: Why has gold surged so strongly? Will the trend continue? Is it too late to enter now?

The Three Core Factors Driving Gold Price Rise

First factor: Rising policy uncertainty

After the new US government took office in early 2025, a series of tariff policies were introduced intensively, directly triggering a surge in market risk aversion. Historically (e.g., during the 2018 US-China trade war), gold typically experiences a short-term rally of 5-10% during periods of policy uncertainty. This time is no exception; concerns over risk assets have boosted demand for gold.

Second factor: Changes in interest rate expectations

The Federal Reserve’s policy stance directly determines gold’s trend. The principle is simple: Lower interest rates = higher gold prices. This is because gold prices have a clear negative correlation with real interest rates—the lower the real interest rate, the lower the opportunity cost of holding gold, making it more attractive.

After the September FOMC meeting, gold prices briefly retreated because the Fed’s 25 basis point rate cut was fully in line with expectations, and the market had already priced it in. Subsequently, Powell described it as a “risk management rate cut,” without indicating further cuts, leading the market to adopt a wait-and-see attitude. According to CME interest rate futures data, there is an 84.7% probability of a 25 basis point rate cut in December, which will be an important reference for future gold trends.

Third factor: Continued accumulation by global central banks

According to the World Gold Council, in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. In the first nine months, total gold purchases reached about 634 tons, slightly below the same period last year but still significantly higher than other periods. The Council’s survey shows that 76% of responding central banks expect to “moderately or significantly increase” their gold holdings over the next five years, and most expect the dollar reserve ratio to decline. This reflects ongoing confidence among central banks in gold as a reserve asset.

Other Important Background Factors Supporting Gold Prices

In addition to the above drivers, several other factors are equally noteworthy:

Helplessness in the global high-debt environment: As of 2025, global debt totals $307 trillion. With high debt levels, countries have limited room for interest rate adjustments, and monetary policy remains accommodative, putting downward pressure on real interest rates and indirectly boosting gold’s attractiveness.

Eroding confidence in the US dollar: When market confidence in the dollar wanes, gold priced in USD becomes a safe haven, attracting capital inflows.

Persistent geopolitical risks: Ongoing Russia-Ukraine conflict, tense Middle East situations—these uncertainties continue to elevate gold’s risk premium.

Market sentiment boost: Continuous media coverage and social discourse amplify market emotions, with large short-term capital inflows causing consecutive surges.

Mainstream Views on Gold in 2025-2026

Despite recent volatility, major forecasting institutions remain optimistic:

• JPMorgan considers this correction a “healthy adjustment,” raising its Q4 2026 target price to $5,055 per ounce.
• Goldman Sachs maintains a target of $4,900 per ounce by the end of 2026.
• Bank of America is more bullish, raising its 2026 target to $5,000, with strategists suggesting gold could break $6,000.

Domestic jewelry brands such as Chow Tai Fook, Luk Fook, and Chao Hong Ji continue to quote pure gold jewelry at over 1,100 TWD/gram, with no obvious decline.

How Should Retail Investors Respond to This Wave?

After understanding the logic behind gold price increases, the key is to choose strategies based on your own situation:

If you are a short-term trader: The greater the volatility, the more opportunities there are. Gold’s liquidity is good, and during sharp rises or falls, the momentum of bulls and bears is clear. However, this requires experience and risk management skills. Beginners often make the mistake of blindly chasing highs; it’s recommended to start with small capital and avoid over-leveraging. Use economic calendars to track US data, especially during US market hours when volatility tends to be highest.

If you prefer long-term allocation: Be prepared to endure fluctuations. Gold’s annual volatility averages 19.4%, not lower than stocks. The long-term bullish logic remains valid, but prices can double or halve in the meantime. Transaction costs for physical gold are usually between 5%-20%, so avoid heavy concentration in a single asset.

If you aim for maximum returns: Consider combining long-term holding with short-term swing trading, especially during periods of data releases when volatility amplifies. This requires sufficient experience and strict risk controls.

Remember these key points:

• Gold is not a stable asset; its volatility rivals stocks.
• Gold cycles are very long; short-term fluctuations can be intense.
• Never allocate all your assets to a single commodity.
• For investors in Taiwan, also consider the impact of USD/TWD exchange rate fluctuations.

Summary

The rise in gold prices is not without reason. Federal Reserve policies, central bank accumulation, geopolitical risks, and other factors provide strong support. The 2025 rally is not over; there is still room for participation in both short-term and medium-to-long-term strategies. However, the prerequisite is to clarify your logic, control risks, and avoid blindly following the trend. Clear-headed investment decisions are always more important than chasing highs and selling lows.