Gold Price Trends 2025 Forecast: Will it Continue to Rise? A Complete Analysis from Central Bank Actions to Federal Reserve Policies

Since reaching a historic high of $4,400 per ounce in October 2024, gold has experienced a pullback, but subsequent market movements continue to spark discussions. Can gold prices still rise? Is it too late to enter now? Instead of blindly following the trend, it’s better to understand the logic behind gold price fluctuations.

Why Does Gold Keep Showing Strength? Three Major Drivers Explained

Over the past two years, gold has performed remarkably well, with this year’s gains approaching the highest levels in nearly 30 years, even surpassing 2007’s 31% and 2010’s 29%. Behind this rally are three forces driving the momentum:

First Force: Policy Uncertainty Sparks Safe-Haven Buying

This year, international trade tensions have been volatile, and rising risk aversion has directly catalyzed gold prices. Historically, during periods of policy uncertainty (such as the US-China trade war in 2018), gold typically experiences short-term gains of 5-10%. Investors habitually view gold as a “insurance” asset allocation, and this demand pushes gold prices higher.

Second Force: Federal Reserve Rate Cut Expectations Lead to Dollar Depreciation

This is the most critical logical chain. When the Fed cuts interest rates, the dollar weakens, reducing the opportunity cost of holding gold and making it more attractive. Historical data shows a clear negative correlation between gold prices and real interest rates—lower rates make gold more valuable.

According to CME interest rate tools, the market expects an 84.7% chance that the Fed will cut rates by 25 basis points at the December meeting. You can use changes in Fed rate expectations as a reference to judge the trend of gold prices.

Third Force: Global Central Banks Continue to Increase Gold Reserves

According to the World Gold Council (WGC), 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 approximately 634 tons, slightly lower than the same period last year but still significantly higher than other periods.

Notably, in WGC’s survey, 76% of responding central banks plan to increase their gold reserves over the next five years, and most expect the proportion of US dollar reserves to decline. This reflects ongoing confidence in gold as a reserve asset.

What Other Factors Support the Rising Gold Prices?

In addition to the main drivers above, the following factors are also at play:

High global debt levels limit countries’ room for interest rate policies, leading to accommodative monetary policies that indirectly lower real interest rates and boost gold attractiveness. Ongoing geopolitical risks (Russia-Ukraine conflict, Middle East tensions) keep demand for safe-haven assets high. Media and social media hype, along with large short-term capital inflows, further reinforce the upward momentum.

However, be aware that these short-term factors may cause sharp volatility and do not necessarily indicate a long-term trend. For Taiwanese investors, fluctuations in USD/TWD exchange rates will also impact returns.

How Do Institutions View the Future of Gold Prices?

Despite recent volatility, many investment banks remain optimistic about gold’s outlook:

JPMorgan’s commodities team considers the recent correction a “healthy adjustment” and has raised its Q4 2026 target price to $5,055 per ounce. Goldman Sachs maintains a target of $4,900 per ounce by the end of 2026. Bank of America strategists suggest that gold could even break through $6,000 next year. The reference prices for physical gold jewelry from well-known jewelry chains remain above 1,100 RMB per gram, with no significant decline.

These forecasts reflect market confidence in gold’s long-term prospects—as a reserve asset with “global trust” characteristics, the factors supporting gold prices have not changed.

Should Retail Investors Still Jump In Now?

After understanding the logic behind gold’s rise, the question becomes: Is it time to enter? The answer depends on your investment style:

If you’re a short-term trader, volatility presents opportunities. Market liquidity is ample, and trend direction is relatively easier to judge, especially during large swings, where bullish and bearish forces are clear. Tracking US economic data via economic calendars can help you better time trades. But remember to start small and avoid blindly increasing positions.

If you prefer to hold physical gold long-term, be prepared for significant fluctuations. Gold’s annual volatility averages 19.4%, comparable to the stock market’s 14.7%. Gold has a long cycle; it may take over ten years to see value preservation, with potential doubling or halving during that period. Transaction costs for physical gold are also higher, typically between 5% and 20%.

If you want to diversify risk, gold can be included in your portfolio, but don’t allocate all your funds to it. Diversification remains the safer approach.

If you aim to maximize returns, you can hold long-term while capitalizing on price swings for short-term gains, especially around US economic data releases. This requires experience and risk management skills.

Final Reminder

Gold is more volatile than stocks. New investors are most prone to blindly chasing highs during surges or panicking and selling during drops. Following the trend without thinking can be costly. Therefore, whether for short-term or long-term, first understand your risk tolerance and investment goals before deciding how to position yourself amid gold price movements.