Gold Price Analysis in 2025: What Are the Real Reasons Behind the Surge to Record Highs?

Since eternity, it has been ingrained in the minds that gold maintains its value and even rises over time, and this belief has kept it prominent in the global financial system, whether as a precious material used in jewelry and industries or as a means to freeze and protect wealth. Whenever the world faces an economic, military, or financial crisis, investors and institutions turn to this yellow metal as a protective shield against currency fluctuations and other assets. This safe haven has proven itself again in recent years.

However, 2025 has witnessed an exceptional phenomenon in gold trading, as this metal has achieved gains unseen in over half a century. Since the beginning of this year, gold prices have risen by 47%, outperforming most major global assets. This surge raises an important question: what is behind this extraordinary performance? And will this upward trend continue?

Economic and Political Factors Driving Gold Prices

When examining the movement of gold prices this year, we discover a complex intersection of various factors working together in the same direction.

US Tariffs and Trade Wars

Trade policy took a sharp turn at the start of this year, with hefty tariffs imposed on imports from multiple countries. This trade tension unsettled financial markets and investors, prompting them to seek safe havens, with gold being the first choice. Threats of additional 100% tariffs on goods from certain countries also redefined the landscape of global trade.

Decline in US Interest Rates

On September 17, the US Federal Reserve made a significant decision to cut interest rates from 4.5% to 4.25%, as expected since the start of the year. This cut directly impacted gold movements, with its price jumping approximately 22.9% in September alone.

Tensions in the Middle East

Military clashes intensified among various parties in the Gulf and Red Sea regions, raising fears of disruptions to maritime navigation and global trade. This concern about potential interruptions in international trade arteries drove investors toward defensive investments.

Political Instability in the US

The partial government shutdown at the end of September, caused by disagreements between Congress parties, added uncertainty to the US economy’s trajectory and raised investor concerns about economic stability.

Institutional Demand Ignites the Rise

Analyzing price movements from the demand side, we find that institutions and investment funds played a crucial role. In the first half of 2025, gold prices increased by 26%, coinciding with record daily trading volumes reaching $329 billion.

Exchange-traded gold funds experienced very strong demand, with their gold holdings increasing by 41% to reach $383 billion. Additionally, central banks worldwide continued purchasing gold as part of their reserves, reflecting major institutions’ confidence in this metal’s value.

Global Inflation: The Hidden Driver

Since the start of this period, international institutions have forecasted sustained high inflation rates. Surpassing the historical average of global inflation, the International Monetary Fund expects global inflation to reach 4.2% this year. This inflationary pressure prompts investors to seek assets that preserve their real value, with gold emerging as a hedge tool.

Geopolitical Developments and Future Outlook

Recent months have seen rapid developments on the global stage. On one hand, fighting in a hot spot has ceased, but fears of new conflicts in other regions persist. On the other hand, trade and diplomatic tensions among major global powers have intensified.

Possible Scenarios for the Coming Months

Scenario One: Relative Stability

In this scenario, we assume current conditions persist without significant escalation or improvement. Under these circumstances, gold prices are expected to stabilize within $3,500 to $3,600 per ounce, achieving an annual return of about 34%.

Scenario Two: Escalation and Pressures

This scenario currently appears more likely given current developments. The global economy may enter a recession accompanied by persistent inflation. In this case, gold could surpass $4,000 and settle around $4,100 by year-end, with an annual return potentially reaching 56%.

Technical Analysis of Gold: Chart Reading

From a price movement perspective, gold has been in a strong upward trend since mid-last year. It has broken through key resistance levels at $3,700 and $3,800, indicating strong bullish momentum.

Recently, the price faced strong resistance at $4,050, a critical point that may signal an upcoming correction. Major support levels are at $3,900, $3,819, and $3,700.

Looking at momentum indicators, positive signals remain, but signs of slowing buying pressure suggest a possible correction soon.

Most Probable Technical Scenario (: A short-term correction toward $3,820 to $3,900 during October, followed by a gradual rebound toward $4,100 to $4,200 in November and December.

Alternative Scenario: A deeper correction to $3,700 if initial support levels are broken, with the upward trend continuing but at a slower pace.

Trading Strategies: Long-term vs. Short-term

Long-term Approach

This strategy focuses on benefiting from gold’s long-term rise, where investors acquire a quantity and hold it for a year or more. The main goal is preserving savings and hedging against inflation. This approach is not only for individuals but also for institutions like central banks and investment firms.

Short-term Approach

This involves frequent buying and selling over short periods, which could be months, weeks, or even days. It requires:

• Deep knowledge of technical and fundamental analysis tools
• Continuous monitoring of prices and news
• Skill in identifying entry and exit points

Ways to Invest in Gold

Investment in gold is not limited to direct physical possession. Investors can also:

• Invest in gold tracking funds
• Buy shares of mining and trading companies
• Trade CFDs )CFDs( to benefit from price movements without actual ownership

These contracts carry higher risks but offer greater profit opportunities with professional risk management and prudent leverage use.

Diversification and Investment Recommendations

Diversifying the investment portfolio is one of the most important principles of safe investing. Investment experts recommend that gold should constitute at least 15% of the portfolio, with some suggesting it could reach 20% of total investments.

Summary and Future Outlook

Gold prices are currently experiencing strong dynamics, making it one of the most attractive investment options. There is a strong likelihood that gold will end the next three months around the $4,100 level, but capitalizing on this opportunity requires a deep understanding of analysis tools and continuous monitoring of economic and geopolitical developments.