Will the gold price index still rise in 2025? Market drivers and future opportunities

Gold prices in 2024 have experienced the strongest rally in nearly 30 years, surging from突破4300美元 to approaching 4400美元. What underlying logic is behind this wave of gains? Many investors are watching closely: Is it still worth entering now? Will there be a short-term correction? What is the long-term trend?

Rather than blindly following the trend, it’s better to understand the three core factors driving the gold price index higher, so you can make more rational decisions amid volatility.

Policy Uncertainty Becomes the Primary Driver of Gold Price Rise

Since the beginning of 2025, international tariff policies have been changing frequently. Adjustments in U.S. economic policies have directly triggered market risk aversion. Whenever trade policy signals become uncertain, investors seek safe-haven assets, and gold remains the most traditional safe haven.

Based on historical experience, during periods of trade friction similar to 2018, gold typically experiences short-term gains of 5%-10% during periods of policy ambiguity. This time, the tariff turmoil has also boosted gold’s attractiveness, making it the first choice for many institutional investors adjusting their asset allocations.

Federal Reserve Rate Cut Expectations as an Invisible Boost to the Gold Index

Changes in the dollar interest rate environment have a direct impact on gold prices. According to financial market observations, lower interest rates tend to push gold higher—the logic is simple: when rates fall, the opportunity cost of holding gold decreases.

The central bank’s rate cut decisions influence nominal interest rates, while real interest rates are equal to nominal rates minus inflation. Therefore, each Fed rate decision can cause fluctuations in gold prices. Market data shows an 84.7% probability that the Fed will cut interest rates by 25 basis points again in December, and this expectation itself supports gold prices.

It’s worth noting that market perceptions of the pace of rate cuts are sometimes more important than the actual rate decisions. When the pace of future rate cuts becomes uncertain, market expectations adjust, and gold prices will fluctuate accordingly.

Central Bank Gold Purchases as a Long-Term Support

According to the World Gold Council report, in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. The total gold purchases in the first nine months were about 634 tons, slightly lower than the same period last year but still significantly higher than other periods.

More notably, in recent reserve surveys, 76% of responding central banks indicated they plan to increase gold reserves over the next five years, while expecting the share of U.S. dollar reserves to decline. This long-term strategic adjustment provides a solid demand foundation for gold.

Other Key Factors Driving the Gold Price Index Higher

High global debt levels and slowing economic growth

By 2025, global debt has reached $307 trillion. High debt levels limit the policy flexibility of central banks, potentially leading to looser monetary policies, which can lower real interest rates and indirectly increase gold’s allocation appeal.

Changing confidence in the U.S. dollar

When market confidence in the dollar wavers or the dollar weakens, gold as a non-dollar asset becomes more attractive, attracting more capital inflows.

Geopolitical risks and short-term capital inflows

Ongoing conflicts such as the Russia-Ukraine war and Middle East tensions increase demand for precious metals as safe assets. Meanwhile, continuous hype on social media and news outlets also attract large short-term capital inflows into gold markets, reinforcing the upward trend.

Warning: These short-term factors may cause sharp volatility at times, but do not necessarily indicate a sustained long-term trend. For investors in Taiwan, fluctuations in USD/TWD exchange rates will also affect the final returns of foreign-currency-denominated gold.

How Do Mainstream Institutions View the Future of the Gold Price Index?

Despite recent pullbacks, major investment institutions remain generally optimistic about gold’s medium- and long-term prospects:

JPMorgan considers the recent correction a “healthy adjustment,” and while warning of short-term risks, has raised its Q4 2026 target price to $5055 per ounce.

Goldman Sachs reiterates its bullish outlook, maintaining a target of $4900 per ounce by the end of 2026.

Bank of America’s strategy team remains optimistic, raising its 2026 target to $5000 per ounce, and even sees potential for gold to break $6000 next year.

From the jewelry retail side, mainstream brands’ pure gold jewelry prices still stay above 1100 TWD/gram, with no significant decline, reflecting continued market confidence.

How Should Retail Investors Respond?

For short-term traders

If you have some market experience, this volatility can present many opportunities. The gold market is highly liquid, with relatively clear ups and downs. Especially around U.S. economic data releases, volatility tends to be most intense, making it a prime window for short-term trading.

For novice investors

Gold’s annual volatility averages 19.4%, comparable to the S&P 500’s 14.7%, making it quite volatile. If you want to participate in short-term trading, it’s advisable to start with small capital, avoid over-leveraging, and maintain a stable mindset—panic selling can wipe out your principal. Using economic calendars to track U.S. economic data can help improve trading decisions.

For long-term holders

Buying physical gold for the long term is an option, but be prepared for potential large fluctuations. Gold’s cycle is very long; over ten years, it can preserve value, but it may also double or halve in value during that period. Additionally, transaction costs for physical gold are relatively high, generally between 5%-20%, which should be considered.

The most balanced approach

If you want to include gold in your portfolio, don’t allocate all your assets to it. Gold is highly volatile, so diversification is wiser. Advanced investors can also try a “long-term hold + short-term swing trading” approach—taking advantage of amplified volatility around U.S. market data releases to seize trading opportunities while managing risks.

Important reminders

Short-term gold price fluctuations often occur around economic data releases and central bank meetings. Tracking these timings is crucial. The proportion of gold in your portfolio should not be too high; diversifying across different assets is smarter. Lastly, don’t be swayed by media and social media hype—rational analysis is the foundation for long-term profits.