Gold Market 2025 Investment Map: Price Drivers and Operational Guide

As 2024 comes to an end, the gold market once again becomes a focal point for asset allocation. From approaching a historic high of $4,400 per ounce in October to subsequent technical corrections, market perceptions of gold prices have become divided. To understand the current mechanisms of the gold market, it is necessary to observe from multiple dimensions.

Deep Logic Behind the Rise of the Gold Market

Federal Reserve Policy Expectations and Actual Interest Rate Inversion

Gold prices show a clear inverse relationship with real interest rates. According to CME interest rate tools data, the probability of the Fed cutting interest rates by 25 basis points at the December meeting is as high as 84.7%. In a rate-cutting environment, the cost of holding dollar-denominated assets decreases, making gold relatively more attractive. This also explains why, after the September FOMC meeting and Powell’s characterization of rate cuts as “risk management” rather than a signal of continued easing, gold prices retreated—market expectations for future rate cuts wavered.

Expansion of Geopolitical and Economic Uncertainty

Frequent adjustments to tariff policies early in 2025 directly increase market safe-haven demand. Based on historical experience (such as during the 2018 US-China trade negotiations), policy uncertainty typically drives a short-term 5-10% increase in gold. Coupled with ongoing Russia-Ukraine conflict and evolving Middle East tensions, the safe-haven attribute of gold is being re-priced.

Systematic Shift in Global Central Bank Reserves Allocation

Data from the World Gold Council shows that net gold purchases by central banks reached 634 tons in the first three quarters of 2025. In central bank reserve surveys, 76% of respondents expect to increase gold holdings over the next five years, while also anticipating a decline in dollar reserves. This reflects a deep change in international reserve asset allocation, providing medium- to long-term support for gold prices.

Monetary Policy Tilt in a High-Debt Environment

By 2025, global debt has reached $307 trillion. High debt levels limit the scope for tightening policies, prompting central banks to maintain relatively loose liquidity environments, indirectly lowering real interest rates and benefiting gold assets.

Expectations from Professional Institutions on the Gold Market Path

Despite recent volatility, major international financial institutions remain optimistic about gold:

JPMorgan Chase defines this correction as a “healthy adjustment” and maintains a long-term optimistic outlook after short-term risk warnings, raising the Q4 2026 target price to $5,055 per ounce.

Goldman Sachs reaffirms its target of $4,900 per ounce by the end of 2026, maintaining its previous outlook for the gold market.

Bank of America strategists recently stated that gold prices could even surge to $6,000 per ounce next year, having previously raised the 2026 target to $5,000.

Well-known jewelry retailers (Chow Tai Fook, Luk Fook Jewelry, Chow Sang Sang, Tse Sui Luen, etc.) still maintain a reference price for pure gold jewelry above NT$1,100 per gram, with no obvious softening.

Multi-Dimensional Investment Strategies for the Gold Market

For Experienced Traders

Volatile markets offer frequent long and short opportunities. In a highly liquid environment, short-term price directions are relatively predictable, with clear momentum during sharp rises or falls, providing abundant trading windows. Tracking key US economic data releases via economic calendars, especially around non-farm payrolls and inflation data, can effectively assist trading decisions during periods of increased volatility.

For Asset Allocation Investors

Entering at this stage requires psychological readiness to endure significant fluctuations. Physical gold’s long-term value remains unchanged, but medium-term volatility should not be underestimated—gold’s annual average volatility is 19.4%, higher than the S&P 500’s 14.7%. It is recommended to use gold as a portfolio allocation tool rather than the main focus, maintaining proper diversification and avoiding over-concentration.

For Long-Term Holders Seeking Preservation

Holding gold over ten years or more can effectively preserve value, but one must accept the possibility of doubling or halving during the process. Physical gold trading costs are relatively high (5-20%), so frequent trading is not recommended; it should serve as a relatively static store of value.

For Beginners New to Gold Market

Avoid following the trend blindly or chasing highs. Start with small amounts to test the market and assess personal risk tolerance. During highly volatile periods, emotional imbalance can lead to chasing high or cutting losses during dips, creating a vicious cycle. Gradually accumulating market understanding before expanding trading scale is advisable.

Advanced Strategies Combining Long and Short Positions

If experienced enough, investors can allocate to gold long-term while exploiting short-term price fluctuations, especially around major US data releases, when volatility significantly increases. However, this requires strict risk control discipline and sufficient experience.

Key Tips for Gold Market Investment

Gold’s volatility is not always stable—its annual average amplitude exceeds that of stocks. While long-term allocation is logically sound, short- and medium-term price swings require mental preparedness. The costs of buying and selling physical gold are high, and frequent trading can erode returns. For Taiwanese investors, USD/TWD exchange rate fluctuations also compound the final returns.

The gold market currently has not lost investment opportunities, but the decision of “whether to enter” should be based on individual risk tolerance, investment horizon, and experience level, rather than simply following market hype.