Why did the price of gold explode in 2025? A comprehensive analysis of the reasons and future outlooks

Gold Breaks Records: 47% Surge in One Year

Since the start of this year, we have witnessed an unprecedented bullish rally in the yellow metal not seen in decades. Indicators confirm that gold prices have increased by over 47% since the beginning of 2025, achieving returns that significantly outpace all other traditional financial assets. This exceptional performance did not come out of nowhere; it resulted from the intersection of multiple economic, political, and geopolitical factors.

Gold Analysis: Economic Drivers Behind the Rise

1. Protectionist Trade Policies and Tariff Escalation

The American decision-makers took bold steps by imposing high tariffs on imports from various countries. These measures sparked a wave of uncertainty in global markets, prompting investors to quickly seek safe havens. As a store of value, gold attracted massive capital inflows, directly reflecting in its rising value.

2. Decline in US Interest Rates

When the US Federal Reserve cuts interest rates, the yield on dollar-denominated assets (such as bonds) decreases, making non-yielding assets like gold more attractive. On September 17, the Fed decided to cut rates from 4.5% to 4.25%, contributing to a jump in its price by about 22.9% within the same month. Expectations of further upcoming cuts boosted demand for the precious metal.

3. Global Inflation Remains Elevated

Despite efforts by central banks to contain price pressures, global inflation rates are expected to stabilize around 4.2% according to the International Monetary Fund for this year, well above the historical average of 2-3%. In such an inflationary environment, investors turn to gold to hedge their wealth and preserve purchasing power.

Geopolitical Catalysts for Gold Analysis

Security Crises in the Middle East

Escalating military tensions among regional powers have raised genuine fears of disruptions to global supply chains and maritime navigation in vital corridors. The greater the geopolitical uncertainty, the higher the demand for safe havens, with gold at the forefront.

US-China Tensions

Threats to impose 100% tariffs on Chinese goods added another layer of uncertainty to the global economy, deepening investors’ pursuit of safe assets.

US Government Shutdown

The US Congress’s failure to reach a funding agreement on September 30 led to a partial government shutdown, creating ambiguity about the health of the US economy, which in turn supported demand for gold as a risk hedge.

Institutional Demand Ignites Gold Prices

ETFs(

Data from the World Gold Council reveal that gold ETF holdings increased by 41%, reaching $383 billion. This massive institutional flow reflects a real reassessment of gold’s strategic role in investment portfolios.

) Central Banks Continue Buying

Many global central banks have continued their programs to increase gold reserves, seeking to hedge against economic and monetary volatility. This long-term steady demand provides firm support for prices.

Trading Volumes Reach Record Levels

Daily gold trading volumes hit $329 billion during the first half of the year, reflecting unprecedented market participant interest.

Technical Analysis of Gold

Current Levels and Boundaries

Examining the chart, we notice that gold faced strong resistance at the $4050 per ounce level, which aligns with the upper Bollinger Band. Other key levels include: $4000 ###psychological resistance(, $3900 )support(, $3819, and $3700 )key support(.

) Momentum Indicator Signals

The MACD indicator currently shows positive signals, with the MACD line remaining above the signal line. However, the histogram has started to indicate potential slowing of buying momentum, suggesting a possible technical correction is imminent.

Possible Technical Scenarios

Main Scenario ###most probable(: A technical correction is expected in the coming weeks toward the range of $3820-$3900, followed by a gradual rebound during November and December toward $4100-$4200.

Alternative Scenario: If support at $3820 is broken, the correction could extend toward $3700, but the overall trend will remain bullish with slower momentum.

Gold Price Forecasts: Different Scenarios

) Scenario One: Relative Stability

Assuming current economic and political conditions persist, with inflation around 4-6%, and rate cuts as expected. In this case, gold may fluctuate between $3500-$3600, achieving an annual return of 34%.

Scenario Two: Ignition ###Most Likely(

This scenario assumes an inflationary development coupled with stagflation, with ongoing geopolitical and trade tensions. In its moderate version, gold could end the year around $4100, with a return of 56%. In a more extreme version, it could break $4000 and reach $4400 by year-end.

Investment Options in Gold

) Long-term Investment

The goal here is not quick profit but preserving value and hedging against inflation. Investors who buy and hold gold for more than a year benefit from its role as a safe haven. Central banks, investment funds, and high-net-worth individuals use this strategy.

( Short-term Trading and Speculation

Active traders may benefit from price fluctuations over days or weeks. However, this requires high proficiency in technical and fundamental analysis of gold.

) Diversified Investment Methods

Instead of physically holding gold, you can invest via:

• Gold ETFs###
• Gold mining company stocks
• CFDs### on gold prices

Important note on CFDs: While these contracts offer the potential for significant profits through leverage, they carry substantial risks and require high skill in management. Example: depositing $1,000 margin and using 1:100 leverage, opening a $100,000 position. A $10 price increase yields a $1,000 profit, but a similar decrease results in an equivalent loss.

Basic Tips for Portfolio Diversification

Diversifying your investment portfolio is fundamental to protecting capital from shocks. Experts recommend that gold should constitute at least 15% of the total portfolio value, with some suggesting up to 20% for better protection against market volatility.

Conclusion: What Does the Future Hold?

Today’s gold price reflects a dynamic balance between strong investor and institutional demand and complex economic and geopolitical factors. Forecasts indicate a strong likelihood of gold prices stabilizing around $4100 by the end of the last quarter of the year. Regardless of the short-term path, accurate gold analysis and prudent investing remain essential to seize opportunities in this dynamic market.