2025 Gold Market Outlook: The True Logic Behind the Rise and Fall of Gold Prices

When gold breaks through the $4,400 per ounce mark in October 2024 to hit a new all-time high, market enthusiasm not only remains but also sparks a new wave of discussions: Should I still enter now? How will gold prices fluctuate? Understanding the underlying factors driving this trend is essential for making more rational investment decisions.

The Three Core Drivers Behind This Round of Gold Price Fluctuations

Market Risk Premium Triggered by Tariff Policies

At the start of 2025, a series of intensive tariff policy implementations significantly increased global market uncertainty. Historical experience shows that similar policy shocks (such as the US-China trade tensions in mid-2018) tend to temporarily boost gold demand by 5–10%, as investors tend to increase holdings of safe-haven assets amid economic ambiguity.

The Battle Between Federal Reserve Policy Direction and Real Interest Rates

Expectations of Fed rate cuts have become a key leverage for gold price movements. Historical data confirms an inverse relationship between gold prices and real interest rates—when rates fall, gold becomes more attractive. According to CME interest rate futures data, the probability of the Fed cutting rates by 25 basis points at the December meeting is 84.7%. This explains why gold price volatility often closely follows Fed expectations, sometimes even reversing after rate cut announcements (such as after the September FOMC meeting).

Global Central Banks’ Continued Gold Reserve Accumulation

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. In the first nine months, total gold purchases reached approximately 634 tons, slightly below the same period last year but still at a high level historically. Notably, 76% of surveyed central banks expect to increase their gold reserves over the next five years, while also anticipating a decline in US dollar reserve ratios—reflecting a potential shift in the international reserve system.

Other Factors Supporting Gold Price Trends

Loose Monetary Policy Expectations Amid High Global Debt

IMF data indicates that global debt reached $307 trillion in 2025, a record high. High debt levels limit countries’ room to raise interest rates, instead fueling expectations of easing policies, which directly suppress real interest rates and indirectly enhance gold’s appeal as a store of value.

Questions About the US Dollar’s Reserve Currency Status

When the dollar weakens or confidence in it declines, gold—priced in USD—tends to benefit, often becoming the first choice for capital flight. Geopolitical tensions (such as the Russia-Ukraine conflict and Middle East risks) also boost gold’s safe-haven demand.

Short-term Market Enthusiasm and Media Effects

Social media and continuous news coverage can trigger a surge of follow-on capital, intensifying short-term price volatility. However, such drivers are difficult to sustain for the long term.

How Do Institutions View Gold Price Outlook?

Despite recent corrections, mainstream institutions remain optimistic about gold’s medium- to long-term trend:

• JPMorgan raised its Q4 2026 target to $5,055 per ounce, viewing the recent pullback as a “healthy correction.”
• Goldman Sachs maintains a target of $4,900 per ounce by the end of 2026.
• Bank of America forecasts gold could surge to $6,000 next year and has raised its 2026 target to $5,000 per ounce.

These forecasts are based on long-term judgments of central bank accumulation, US dollar weakness, and low interest rate environments.

Different Investor Participation Strategies

Short-term Traders: Volatility as Opportunity

If you possess strong technical analysis skills and risk management experience, the oscillations provide ample trading opportunities. The gold market is highly liquid, with clear bullish and bearish forces during sharp moves. Capturing volatility around US economic data releases can significantly boost returns. It’s recommended to track key data releases via economic calendars.

Novice Investors: Exercise Caution

If you want to test the waters during price swings, the first principle is small-scale testing. Gold’s average annual amplitude is 19.4%, higher than the S&P 500’s 14.7%, so volatility risk should not be underestimated. Blindly chasing highs or frequent stop-losses can quickly deplete capital and lead to emotional breakdowns, doubling losses.

Long-term Holders: Psychological Preparation Is Key

Buying physical gold for long-term preservation requires mental readiness for intense fluctuations. Gold cycles are long; holding for over 10 years can fully realize its value-preserving and appreciating functions, though it may experience doubling or halving. Additionally, transaction costs for physical gold typically range from 5%–20%, which must be considered.

Portfolio Diversifiers: Risk Spreading Is Essential

Including gold in an investment portfolio as a hedge is rational, but over-concentration should be avoided. Given gold’s volatility, a reasonable allocation is recommended, combined with other asset classes to achieve effective diversification.

Advanced Players: Combining Long and Short Strategies

If you have sufficient experience and discipline, you can hold gold long-term while leveraging price fluctuations for short-term trades, especially around US market data releases. This strategy requires strong risk control but offers higher profit potential.

Three Reminders in the Gold Price Battle

Gold’s Volatility Should Not Be Underestimated — with an average annual amplitude close to 20%, sharp fluctuations are normal in the short term.

Exchange Rate Risks for Taiwanese Investors — purchasing USD-denominated gold also involves USD/TWD exchange rate risks, which can impact final returns.

Timing Is Critical — key turning points often occur around US market open and close, or during major economic data releases.

The current gold market still contains opportunities, but only if you recognize your own investment capacity and risk tolerance. Avoid blindly following the crowd. The long-term logic of gold price movements remains intact, but short-term trading requires caution.