What will happen to gold prices in 2025? Central bank massive buying, weakening US dollar, and risk aversion sentiment combined to push up gold prices.

Over the past year and a half, the global markets have been tumultuous, and gold has once again become the focus of investors. After breaking through a historic high of $4,400 per ounce last October, markets have pulled back slightly, but the enthusiasm remains strong. Many are asking: Will gold prices continue to rise today? Is it too late to enter now?

To judge the future direction of gold prices, we first need to understand why they are rising. The logic behind this round of gold rally determines our outlook.

Central Banks Worldwide Are Buying Gold, This Is the Core Support for Price Increase

According to data from the World Gold Council, net gold purchases by global central banks reached 220 tons in the first three quarters of 2024, a 28% increase compared to the previous quarter. In the first nine months, central banks worldwide have accumulated approximately 634 tons of gold, still well above historical averages.

Interestingly, surveys show that 76% of responding central banks believe that the proportion of gold in their reserves will be “moderately or significantly increased” over the next five years, while over half expect the “USD reserve ratio” to decline. What does this imply? Central banks are expressing confidence in gold’s value through concrete actions and re-evaluating the US dollar’s status.

Geopolitical Risks + Monetary Policy Double Boost, Short-term Volatility Intensifies

Besides the long-term support from central bank accumulation, other key drivers have recently propelled gold prices:

Safe-haven demand driven by political uncertainty: New tariffs, ongoing Russia-Ukraine conflict, tense Middle East situation—these black swan events are increasing market risk appetite, prompting investors to flock to safe-haven assets like gold. Historical experience shows that during periods of policy uncertainty, gold often jumps 5-10% in the short term.

The gap between Fed rate cut expectations and actual actions: Rate cuts are indeed beneficial for gold, as lower interest rates weaken the dollar’s attractiveness and reduce the opportunity cost of holding gold. But there’s a subtlety—when the market has already priced in rate cut expectations, actual central bank decisions can trigger volatility. After the September FOMC meeting last year, gold prices fell instead of rising because the 25 basis point rate cut was fully expected and did not surprise the market.

Based on implied probabilities, the market estimates about an 85% chance that the Fed will cut rates by 25 basis points in December. This data point can be an important reference for judging today’s gold price trend.

Lower real interest rates are the ultimate driver for gold: This is the key logic—gold prices have a clear negative correlation with real interest rates. Real interest rate = nominal interest rate – inflation rate. When central banks cut rates and inflation remains sticky, real interest rates are pushed down, making gold more attractive.

Other Deep Factors Supporting Gold

Global high debt environment limits policy flexibility: As of 2024, global debt totals $307 trillion. Under high debt pressures, central banks have no choice but to adopt loose monetary policies, further lowering real interest rates and indirectly boosting gold demand.

Declining confidence in the US dollar: Gold priced in USD benefits when the dollar weakens. When market confidence in USD reserves drops, investors naturally increase gold holdings as a supplement.

Media effects amplify short-term volatility: Continuous reporting and social media hype attract a large amount of speculative capital, fueling short-term rallies. This phenomenon usually does not indicate a sustained long-term trend.

How Do Major Institutions View the Future? Major Investment Banks Are Generally Optimistic

Despite recent corrections, large investment institutions remain optimistic about gold’s prospects:

• J.P. Morgan Commodity Team: Views this correction as a healthy adjustment, raising the Q4 2026 target price to $5,055 per ounce
• Goldman Sachs: Maintains a target price of $4,900 per ounce by the end of 2026
• Bank of America: Raises the 2026 target price to $5,000, with strategists even suggesting a potential surge to $6,000 next year

The logic behind these targets is consistent: the fundamental factors supporting gold price increases have not changed.

How Should Retail Investors Participate in the Gold Market Now?

After understanding why gold prices are rising, the next question is: What should I do?

For short-term traders: Gold’s annual volatility is 19.4%, comparable to stocks, and volatility itself creates opportunities. Key trading times are around US economic data releases and Federal Reserve meetings, when market momentum is clearer and easier to grasp. But this requires sufficient risk awareness and strict stop-loss discipline.

For novice retail investors: Don’t chase highs blindly. If you want to try short-term trading, test the market with small amounts first—never add infinitely. Once your mindset collapses, it’s easy to lose all your capital. Tracking the US economic calendar helps catch data release timings and supports trading decisions.

For long-term allocators: If you plan to buy physical gold or hold long-term positions, be prepared for significant volatility. Gold cycles are long; it takes over ten years to realize full value preservation and appreciation. During this period, prices may double or halve. Assess your risk tolerance carefully.

For asset allocation: It’s not advisable to allocate all your funds to gold. Gold’s volatility is not lower than stocks; it should be part of a diversified portfolio, balanced with other asset classes.

For investors seeking maximum returns: Consider holding long-term while engaging in short-term trades during obvious price swings, especially before and after US market hours. This requires experience and risk control skills.

Final Reminders

• Gold trading costs are relatively high; physical gold usually costs between 5-20%
• Today’s gold price trend and future outlook are full of variables; policy data releases can cause sharp fluctuations
• Taiwanese investors should also consider USD/TWD exchange rate factors, which may affect actual returns
• Regardless of your strategy, risk management always comes first

As a globally recognized reserve asset, gold’s long-term bullish logic remains valid, but short-term trading must be approached with caution.