Gold Investment Guide: Gold Price Comparison and 2025 Deployment Strategy

Between 2024 and 2025, the global economic situation remains volatile, and gold has once again become a market focus. From the record high of $4,400 per ounce in October to subsequent adjustments, the market is still filled with various voices—Will gold prices continue to rise? Is it too late to enter now? To answer these questions, one must understand the fundamental logic behind gold price fluctuations.

The Three Core Logics Behind the Surge in Gold Prices

International spot gold XAU/USD has shown a continuous upward trend over the past two years, with the gains in 2024–2025 approaching the highest levels in nearly 30 years, surpassing 31% in 2007 and 29% in 2010. This rally is not accidental but the result of multiple factors stacking up.

First Layer: Policy Uncertainty Driving Safe-Haven Demand

The successive tariff measures under the new policy environment have sent strong signals of uncertainty, significantly boosting market risk aversion sentiment. Historical data shows that during similar periods of policy uncertainty (such as the US-China trade friction in mid-2018), gold typically records short-term gains of 5–10%. When economic outlooks are unclear, investors tend to shift funds into assets regarded as “safe havens,” with gold being the prime representative.

Second Layer: Federal Reserve Rate Cuts and Real Interest Rate Decline

Gold prices have an inverse relationship with real interest rates—when rates fall, gold becomes more attractive. The Fed’s rate cut decisions influence nominal interest rates, which in turn affect real interest rates (real interest rate = nominal rate – inflation rate), directly impacting gold prices. According to CME interest rate tools, there is an 84.7% chance that the Fed will cut rates by 25 basis points at the December meeting. This explains why markets closely monitor each rate cut expectation and decision—gold price fluctuations almost always follow these expectations.

Third Layer: Global Central Banks’ Gold Reserve Expansion

According to the World Gold Council(WGC) report, in Q3 2024, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months, central banks accumulated about 634 tons of gold, reaching a record high for the same period. Notably, 76% of surveyed central banks expect to “moderately or significantly increase” their gold holdings over the next five years, while most expect the “US dollar reserve ratio” to decline. This shift reflects a re-evaluation of gold as a reserve asset.

The Macroeconomic Background Supporting Gold Price Rise

In addition to the core factors above, ongoing structural changes in the global economy continue to support gold:

• High debt era: Governments face limited policy space. As of 2024, global debt totals $307 trillion(IMF data), forcing countries to adopt more accommodative monetary policies, which depress real interest rates and indirectly enhance gold’s relative attractiveness.

• Geopolitical risks (Russia-Ukraine conflict, Middle East tensions) increase demand for safe assets. When international tensions escalate, gold often becomes the first choice for “insurance policies.”

• Confidence in the US dollar wavers. When the dollar weakens or confidence in it declines, gold priced in dollars benefits, attracting capital inflows.

• Media and social media hype can catalyze short-term capital inflows, although such effects are usually not sustainable.

Institutional Forecasts: Future Gold Price Trends

Despite recent volatility, mainstream institutions 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 is more aggressive; after raising its 2026 target to $5,000 per ounce, strategists recently stated that gold could even break through $6,000 next year.

• Domestic jewelry chains (Chow Tai Fook, Luk Fook, Chow Sang Sang, and others) still quote pure gold jewelry at over 1,100 TWD/gram, with no significant decline. These signs indicate market confidence in gold’s medium- to long-term prospects.

Perspective on Gold vs Other Assets: A Comparison

From a volatility perspective, gold’s annualized fluctuation is 19.4%, which is not lower than the S&P 500’s 14.7%. This suggests that although gold is viewed as a safe-haven asset, its short-term price swings carry notable risk. Therefore, in portfolio allocation, gold should be regarded as a risk asset supplement rather than a purely safe asset.

Retail Investor Decision-Making Framework

After understanding the logic behind rising gold prices, the next question is: Should I enter now?

For experienced short-term traders: Volatile markets offer many opportunities. Market liquidity is ample, and short-term direction is relatively easier to judge, especially during sharp rises or falls, where bullish or bearish momentum is clear. It’s recommended to use economic calendars to track US economic data and seize volatility around key releases.

For beginners: If aiming to capture short-term opportunities, remember—start with small amounts, avoid blindly increasing positions. A fragile mindset can easily lead to larger losses. Focus on learning risk control first, rather than chasing high returns.

For long-term holders: If planning to allocate physical gold as a hedge, be prepared for medium-term fluctuations. Gold’s cycle is very long—over a 10-year horizon, the value preservation promise is generally achievable, but within those 10 years, it can double or halve. Additionally, transaction costs for physical gold are high(usually 5%–20%), which must be considered.

For portfolio allocators: Gold can be included in an investment portfolio but should not be the sole asset. Diversification remains the more prudent approach. To maximize returns, consider holding long-term while using price volatility for short-term trading—especially around US market data releases to capture increased volatility windows.

Investment Tips

Finally, a few key reminders:

• Gold’s volatility is not low; with an annual fluctuation of 19.4%, it should not be regarded as a low-risk asset. During US economic data releases or Fed meetings, risks tend to amplify, requiring extra caution.

• Fluctuations in forex (e.g., USD/TWD) will further impact local investors’ actual returns.

• Over-concentrating in gold increases overall portfolio risk exposure.

Overall, gold remains a globally trusted reserve asset, with no fundamental change in medium- to long-term support factors. However, in actual trading, short-term volatility risks must be carefully managed. Regardless of the strategy chosen, risk management and psychological control are the ultimate determinants of returns.