2025 Gold Grain Price Trend Analysis: Central Bank Net Purchases, Policy Uncertainty, and Long-term Support

The performance of the gold market in 2024–2025 is remarkable. From breaking the record of $4,300 per ounce last October to recent fluctuations and adjustments, what market logic is hidden behind this trend? For investors interested in participating, understanding the core drivers of gold price movements is crucial.

Industry Institutions Remain Optimistic About Gold Price Outlook

Despite recent market volatility, major global investment banks have not changed their long-term outlook for gold.

J.P. Morgan Commodity Team considers the current correction a “healthy market adjustment” and has raised its Q4 2026 target price to $5,055 per ounce. Goldman Sachs’ strategy division maintains a target of $4,900 by the end of 2026, indicating confidence in medium-term gold trends. Bank of America is more aggressive; after previously raising its 2026 target to $5,000, analysts recently stated that gold could even challenge the $6,000 level in the future.

These forecasts reflect institutional investors’ bullish attitude towards the fundamentals supporting gold prices. Meanwhile, retail jewelry pricing—brands like Chow Tai Fook, Luk Fook, and Chow Sang Sang in mainland China—still reference prices above 1,100 RMB/gram, with no obvious decline, confirming overall market expectations.

Three Core Factors Drive Gold Price Rise

Policy Uncertainty Sparks Safe-Haven Sentiment

Since early 2025, a series of tariff policy announcements have directly triggered gold rallies. When market uncertainty increases, investors tend to turn to gold as a safe-haven asset. Historical data shows that during similar periods of U.S.-China trade tensions in mid-2018, gold typically experienced short-term gains of 5–10%.

Federal Reserve Rate Cut Expectations and Real Interest Rate Dynamics

The Federal Reserve’s monetary policy directly influences real interest rates (nominal rate minus inflation), and gold prices have an inverse relationship with real interest rates—when rates fall, gold becomes more attractive. This is because the opportunity cost of holding gold decreases.

After the September FOMC meeting, gold prices retreated because a 25 basis point rate cut was fully in line with market expectations and had been priced in. Moreover, Powell characterized it as a “risk management rate cut” rather than a signal of ongoing rate cuts, leading to a wait-and-see attitude for future cuts. According to CME interest rate tools, the probability of another 25 bps rate cut in December is 84.7%. Such data changes are key references for judging gold price trends.

Global Central Banks Continue to Increase Gold Reserves

Data from the World Gold Council shows that in Q3 2024, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months of 2024, central banks accumulated about 634 tons of gold, slightly lower than the same period last year but still high.

Notably, in the Council’s June survey of central bank gold reserves, 76% of respondents believed they would “moderately or significantly increase” their gold holdings over the next five years, while most expect the share of USD reserves to decline. This reflects the strengthening strategic position of gold within the global financial system.

Medium-Long Term Support Factors Cannot Be Ignored

Beyond the three main drivers, other factors support long-term gold appreciation:

Global High Debt Environment Limits Policy Flexibility

IMF data shows that as of 2024, global debt totals $307 trillion. High debt levels compel central banks to adopt easing policies, which lower real interest rates and indirectly benefit gold.

Dollar Confidence Fluctuations

When the dollar weakens or market confidence wanes, gold priced in USD benefits and tends to attract capital inflows.

Persistent Geopolitical Risks

Ongoing conflicts like the Russia-Ukraine war and Middle East tensions increase demand for safe-haven assets, providing short-term catalysts for gold volatility.

Media and Social Media Effects

Continuous news coverage and social opinion can trigger short-term capital inflows, amplifying volatility. It’s important to note that these factors may cause sharp short-term swings but do not necessarily indicate a long-term trend. For Taiwanese investors, USD/NTD exchange rate fluctuations also impact returns.

Strategies for Different Investors

Experienced Short-Term Traders

Volatile markets offer opportunities for technical trading, with ample liquidity making it easier to judge direction. However, this requires strong risk management skills and sensitivity to economic calendars—especially tracking U.S. economic data releases.

Novice Market Entrants

If attempting short-term trades amid volatility, start with small amounts and avoid over-leverage. Emotional control is vital to prevent significant losses. Use economic calendar tools to track data and inform trading decisions.

Long-Term Asset Allocators

For those planning to buy physical gold as a hedge, be prepared for significant fluctuations. The annual average volatility of gold is 19.4%, higher than the S&P 500’s 14.7%, and transaction costs range from 5–20%. Diversification is recommended rather than full concentration.

Portfolio Optimization Strategies

On top of long-term holdings, short-term trading opportunities—especially around major U.S. economic data releases—can be exploited. This approach requires trading experience and risk control capabilities.

Key Tips on Gold Price Trends

Gold has a very long cycle; over a decade, it can preserve or increase value, but may also double or halve in value. The 2024–2025 rally approaches a 30-year high (exceeding 2007’s 31% and 2010’s 29%), reflecting resonance of long-term factors, but also necessitating caution for short-term corrections.

Overall, the fundamental factors supporting gold prices remain unchanged: central banks continue to increase holdings, real interest rates stay low, and geopolitical risks persist. Currently, there are both opportunities and risks; the key is choosing strategies aligned with your risk tolerance and investment horizon, and avoiding blindly following the crowd.