What does the 2025 golden wave fluctuation imply? How should investors respond?

This wave of the gold market is interesting.

After surging to a record high of $4,400 in October and then pulling back, market sentiment remains undeterred. Institutions like JPMorgan Chase, Goldman Sachs, and Bank of America have instead raised their target prices one after another—JPMorgan Chase predicts $5,055 by Q4 2026, and Bank of America even hints that gold could surge toward $6,000. What is really behind this wave of gold volatility?

Why is the whole world rushing for gold?

To put it simply, gold has already approached a 30-year high. The gains in 2024-2025 exceed the 31% in 2007 and 29% in 2010—this is no small wave.

Three main forces are driving this wave:

First wave: Uncertainty caused by tariff policies

Since Trump took office, he has repeatedly taken action, making market expectations for the future fuzzy. Historically (for example, during the 2018 US-China trade war), such periods of policy uncertainty usually cause gold prices to rise short-term by 5-10%. As risk aversion increases, funds flow into gold.

Second wave: Reversal of interest rate expectations

Here’s a logic to understand: The lower the real interest rate, the more attractive gold becomes. When the Fed cuts interest rates, it pushes down rates overall, and the dollar weakens, reducing the opportunity cost of holding gold. According to CME interest rate tools, there is an 84.7% chance that the Fed will cut interest rates by 25 bps at the December meeting. The rise and fall of gold prices basically dance to the Fed’s policy rhythm.

Third wave: Major central banks continue to increase holdings

The World Gold Council reports that in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months, total gold purchases reached about 634 tons. Interestingly, 76% of surveyed central banks said they would “moderately or significantly increase” their gold reserves over the next five years, while also expecting the dollar reserve ratio to decline. Central banks are voting with their actions in support of gold.

What other factors are fueling the surge?

Global debt has already broken through $307 trillion, and central banks have limited policy flexibility, likely leaning toward easing policies, which directly lowers real interest rates. The Russia-Ukraine war is ongoing, and Middle East conflicts haven’t fully subsided; geopolitical risks persist, maintaining demand for precious metals as safe havens.

Of course, media and community hype also play a role—continuous reports and emotional amplification lead short-term capital to flood into the gold market, causing this continuous rise.

But note, short-term factors may trigger intense volatility, which does not necessarily mean the long-term trend will continue. For Taiwanese investors, USD/TWD exchange rate fluctuations will also impact actual returns.

How to operate during gold volatility?

Is it too late to enter now? Honestly, it depends on your trading style.

If you’re a short-term expert, this kind of volatility is an opportunity. Liquidity is ample, and the rhythm of rise and fall is relatively clear. Especially during sharp surges or drops, the strength of bulls and bears can be seen at a glance. Using economic calendars to track US economic data can better assist decision-making.

If you’re a beginner trying to bottom fish, start with small amounts to test the waters—absolutely avoid blindly increasing positions. Gold’s average annual amplitude is 19.4%, which is more volatile than stocks (S&P 500 at 14.7%), so the emotional impact during fluctuations can be intense.

If you want to hold physical gold long-term, be prepared for significant fluctuations. Chow Tai Fook, Luk Fook Jewelry, Chao Hong Ji, and other brands’ pure gold jewelry prices still stay above 1100 TWD/gram, but the buy-sell spread is usually 5-20%, and transaction costs are not low.

A smarter approach is diversification. Gold can have a place in your portfolio, but don’t put all your eggs in one basket. If you have experience and risk management skills, you can hold long-term while also seizing short-term opportunities during price swings, especially around US data releases, when volatility tends to amplify.

A reminder: Gold cycles are long—over 10 years can preserve and increase value, but within that decade, prices can double or be cut in half. So don’t put all your eggs in the gold basket.

Gold volatility isn’t over yet; both medium and short-term opportunities remain. Just remember—blindly following the trend without thinking is the easiest way to lose money.