International gold price trends in 2025: From historic highs to investment decisions

Why Did Gold Prices Surge to Record Highs in the Past Two Years?

In October 2024, international gold prices approached a record high of $4,400 per ounce, marking nearly a 30-year high. According to data, the rally in 2024-2025 has surpassed the 31% increase in 2007 and the 29% in 2010. However, the subsequent pullback has left many investors confused: Will international gold prices continue to rise?

To understand the current gold price volatility, one must grasp the underlying driving logic. This rally is not driven by a single factor but is the result of multiple forces acting together.

Multiple Factors Resonating to Drive Up Gold Prices

Policy Uncertainty Boosts Safe-Haven Demand

After the new government took office, a series of tariff policies were introduced, directly triggering market concerns about economic prospects. Historical experience shows that during policy changes (such as the US-China trade war in 2018), gold prices typically experience a short-term increase of 5-10%, as investors tend to allocate safe-haven assets to hedge risks.

US Dollar Depreciation and Changing Interest Rate Expectations

Expectations of Fed rate cuts have a profound impact on gold prices. Real interest rates (nominal interest rate minus inflation) show a clear negative correlation with gold prices—lower interest rates reduce the opportunity cost of holding gold, attracting more capital inflows. According to CME interest rate futures data, the probability of the Fed cutting rates by 25 basis points in December is 84.7%. These expectations are almost fully reflected in gold price fluctuations.

It is worth noting that after the FOMC meeting in September, gold prices fell instead. The reason is that the market had already priced in the rate cut, and Fed Chair Powell characterized this as a “risk management” rate cut, without signaling continued easing, leading to a shift in market sentiment regarding future policy directions.

Global Central Banks Increasing Gold Reserves

Data from the World Gold Council(WGC) shows 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 approximately 634 tons, lower than the same period last year but still high. More importantly, in a survey, 76% of central banks indicated they would “moderately or significantly increase” their gold holdings over the next five years, while most expect the dollar reserve ratio to decline—reflecting a renewed recognition of gold’s importance as a reserve asset in the international financial system.

Long-Term Support from the Macro Environment

High debt levels (global debt totaling $307 trillion) limit policy maneuvering space for countries, leading to a tendency toward more accommodative monetary policies. Geopolitical risks, fluctuations in dollar confidence, and market sentiment driven by social media have all intensified short-term upward momentum for gold.

Institutional Outlooks Are Generally Optimistic

Despite recent volatility, international investment institutions remain bullish on medium- and long-term gold price trends:

• J.P. Morgan Commodity Team** raised their Q4 2026 target to $5,055 per ounce
• Goldman Sachs maintains a forecast of $4,900 per ounce by the end of 2026
• Bank of America is more aggressive, suggesting gold could challenge $6,000 next year

The rationale behind these forecasts is that gold, as a “trust” reserve asset globally, is supported by fundamental factors that underpin its long-term price.

How Should Retail Investors Respond to Current Gold Prices?

Understanding the driving logic behind international gold price movements, the key to investment decisions lies in your risk tolerance and trading experience.

For short-term traders, the current volatile environment offers multiple trading opportunities. Market liquidity is good, and during sharp rises or falls, the bullish and bearish forces are clear, making it suitable for experienced speculators. However, beginners should start with small positions and avoid blindly increasing their holdings, as gold’s annual volatility averages 19.4% (higher than the S&P 500’s 14.7%), and the risk of fluctuation should not be underestimated.

For medium- to long-term allocators, be prepared for significant volatility during the process. Gold has a long cycle and can preserve or increase value over a 10-year horizon, but it can also double or halve in value during that period. Additionally, physical gold has higher transaction costs (5-20%), so it is advisable not to allocate excessively.

The most practical approach is to include gold as part of a diversified portfolio, and on the basis of long-term holdings, take advantage of short-term fluctuations around US market data releases for tactical trading. This requires some market experience and risk management skills.

Core Reminders

Judging the trend of international gold prices requires both macro perspective and risk awareness: on one hand, the fundamental support for gold remains; on the other hand, short-term volatility risks should not be ignored, especially around economic data releases and Fed meetings. For Taiwanese investors, the USD/TWD exchange rate fluctuations also impact actual returns. Most importantly, whether aiming for high returns or steady allocation, avoid blindly following the crowd and develop strategies based on your own situation.