Why is gold reaching a new all-time high? Is it a good time to buy now? Four key investment logic points every investor must know.

Gold prices continue to hit new highs. Since the rally began in October 2023, in just over a year, gold has surged from $2,700 to surpass $4,000, an increase of up to 48%. According to forecasts by international financial analysis institutions, the average gold price for 2025 will hover around $3,400, with potential further rise to $4,275 in 2026.

What is driving this wave of price increases? Is now still a good time to enter the market? This article will analyze the core logic of gold investment from three dimensions: fundamentals, technical analysis, and risk management.

Why is gold valuable? The four fundamental reasons for its price surge

Gold itself does not generate interest. Its status as a favored global asset allocation is mainly due to structural changes in supply and demand. When investor confidence in fiat currencies and traditional assets wavers, gold becomes the best “safe haven.”

1. Global ultra-loose policies accelerate cash depreciation

Since 2020, the US has implemented unlimited quantitative easing, printing massive amounts of dollars to stimulate the economy. These new currencies flow globally, boosting inflation expectations. By 2022, the Federal Reserve was forced to aggressively raise interest rates to curb inflation, leading to significant devaluation of US and global debt.

The result of these actions is: cash is depreciating, and the creditworthiness of US bonds is declining. In this environment, investors naturally seek assets with better preservation of value as alternatives.

2. Increased competition from alternative assets, boosting safe-haven demand

Gold is no longer the only tool for value preservation. Bitcoin has broken through $100,000, and discussions about including cryptocurrencies in strategic reserves have begun worldwide. The rising prices of these alternative assets fundamentally reflect the same signal: a deep crisis of confidence in the US dollar.

Coupled with frequent geopolitical conflicts, rising protectionism, and increased demand for safe assets, the purchasing power of gold is further driven up.

3. Basel Accord revisions, “upgrading” gold’s status

Major revisions have been made to the international financial regulatory framework: gold has been upgraded from Tier 3 to Tier 1 capital, enjoying the same status as government bonds and cash as a top-tier asset. This change is milestone-worthy.

Why? Because it means banks now have strong incentives to buy large amounts of gold. Compared to the continuously printed new currencies, gold’s scarcity is unmatched, with increasing mining costs year after year, and its hedging potential far exceeding expectations.

4. Continued central bank buying spree

Global central banks are initiating a new wave of gold purchases. This is no coincidence but a reassessment of strategic reserve structures by various countries. Gold is not only an ancient monetary memory but also the best choice to hedge future uncertainties.

Is it worthwhile to buy gold now? Fundamental analysis

In the short term, gold still has investment value.

Expectations of Fed rate cuts remain, and the US dollar is relatively weakening, providing support for gold prices. As trillions of dollars flow out of the currency markets, gold and government bonds, as “first-tier assets,” will continue to be favored by institutional investors.

But this does not mean gold will keep rising infinitely.

In fact, competitors for gold are increasing. Bitcoin, government bonds, and other safe assets are all vying for investor funds. Slight policy adjustments by the Fed, changes in global economic data, or easing geopolitical conflicts could all alter market expectations.

Our judgment is: the medium- to long-term trend of gold remains upward, but short-term gains will gradually slow, and volatility may increase.

Gold vs. other assets: a triangular game

Looking at the performance over the past year, Bitcoin’s gains have indeed outpaced gold, with more volatility. But this precisely highlights gold’s unique advantage: stability.

For investors with limited risk tolerance, gold remains an indispensable defensive asset in asset allocation. Comparing across multiple assets, US government bonds are currently at relatively low levels, making them attractive; while gold is already at high levels, with limited upside potential, which suggests future gains should be more conservative.

When is the best time to buy gold? Pullbacks are the real opportunity

The most foolish thing in gold investment is blindly chasing highs. The smartest approach is to wait for pullbacks and use technical analysis to enter precisely.

Why are pullbacks the buying opportunity?

Gold’s upward channel is not a straight line. Under the main upward trend, gold will experience multiple pullbacks. If investors can enter during these pullbacks, they can buy at lower costs and expect higher returns. This is not about bottom-fishing blindly but about confirming the ongoing upward trend and using technical tools to find the best entry points.

Technical guidance: Bollinger Bands trading rules

From a technical perspective, gold prices are still operating within an upward channel. The Bollinger Bands indicator is an effective tool for judging entry and exit points.

When gold approaches the lower band, it often signals a buying opportunity. Investors can consider building positions, setting stop-losses below the lower band, and letting take-profit levels move up as prices rise. This approach controls risk while avoiding missing out on gains due to excessive caution.

Simply put, as long as gold falls back near the lower Bollinger Band, it is the most ideal entry point for medium- to long-term investors.

Comparing gold investment tools: choosing the right tool to reduce costs and improve efficiency

There are many ways to participate in gold investment, but costs and efficiency vary greatly.

Physical gold: gold bars, jewelry look tangible, but buy-sell spreads are large, liquidity is poor, and storage costs are high. For individual investors, the investment value is limited.

Gold futures: high liquidity, small spreads, but high account opening thresholds, large margin requirements, and inefficient capital use. Non-professional investors risk margin calls.

Gold options: nonlinear payoff curves, making stable profits very difficult; more suitable for derivatives experts.

Gold CFD contracts: a derivative tracking spot gold. Its advantages include very convenient trading, no need for monthly rollovers like futures, and no complex calculations like options. Investors can participate with leverage, making it the lowest-cost, best-experience choice for most individual investors.

Who is suitable for investing in gold?

Simply put: everyone.

Central banks invest in gold for strategic reserves and inflation hedging; hedge funds invest in gold to reduce overall portfolio volatility; individual investors invest in gold for diversification and risk management.

Different goals, different investment horizons, and different tools are chosen accordingly. But regardless of identity, as long as there is idle capital, it is worthwhile to allocate some in gold or gold-related products based on why gold is valuable and its safe-haven properties.

Summary: the core logic of gold investment

The record-high gold prices are driven by multiple factors: a crisis of confidence in the global monetary system, surging safe-haven demand, policy framework upgrades, and more.

From a fundamental perspective, these drivers are unlikely to reverse in the short term, and the value of medium- to long-term gold allocation remains solid.

From a technical perspective, short-term high-level oscillations are inevitable, but as long as gold falls back to the lower Bollinger Band, it presents the best entry opportunity.

Is it worthwhile to buy gold now? The answer is: buy at the right time, which is when the logic of why gold is valuable remains unchanged and a pullback occurs.