2025 Gold Price Forecast: From Safe-Haven Sentiment to Revaluation

Entering the second half of 2024, the gold market has sparked a strong wave of upward surge. As gold prices approached a historic high of $4,400 per ounce in October, market discussions also reached a peak. Although a certain degree of correction followed, the driving logic behind this rally has not changed; in fact, it has become clearer. For investors looking to participate in the gold trend, understanding the fundamental causes of this rise is far more important than blindly chasing the surge.

Why Are Gold Prices Skyrocketing? Three Core Drivers

Driver 1: Geopolitical and Policy Uncertainty

The global political environment in 2024–2025 is full of variables, especially with adjustments in U.S. policies causing market volatility. When tariffs and trade policies are intensively introduced, risk aversion sentiment quickly heats up, and capital flows heavily into traditional safe-haven assets like gold. Based on historical experience, during periods of trade friction similar to 2018, gold prices typically experience a short-term surge of 5–10% amid policy uncertainty. Currently, concerns over new policy changes are also boosting demand for gold.

Driver 2: The Logic of Falling Real Interest Rates

The monetary policy stance of the Federal Reserve has a profound impact on gold prices. Expectations of rate cuts directly suppress real interest rates—and this is the core driver of gold price increases. When real interest rates (nominal rate minus inflation rate) decline, the opportunity cost of holding gold decreases, making gold more attractive.

Historical data shows a clear negative correlation between gold trends and real interest rates: declining real interest rates → increased gold demand. According to the latest CME interest rate tools, the probability of the Fed cutting interest rates by 25 basis points at the December meeting is as high as 84.7%. Investors can use the FedWatch tool’s data changes as a reference for judging gold trends.

Driver 3: Continued Central Bank Accumulation

Global central banks’ demand for gold remains strong. According to data from the World Gold Council (WGC), in Q3 2025, net gold purchases by central banks reached 220 tons, a 28% increase quarter-over-quarter. In the first nine months, total gold purchases amounted to approximately 634 tons, slightly lower than the same period last year but still well above historical averages.

What does this reflect? Central banks worldwide are re-evaluating their reserve asset compositions. The WGC’s June survey on central bank gold reserves shows that 76% of respondents believe the proportion of gold will be “moderately or significantly increased” over the next five years, while most expect the dollar reserve ratio to decline. This long-term structural adjustment provides a solid foundation for gold prices.

Deep Factors Supporting Gold Price Rise

In addition to the three main direct drivers, some long-term structural factors are also boosting gold’s attractiveness.

The high global debt environment limits policy flexibility. By 2025, global debt has reached $307 trillion. Against this backdrop, governments tend to adopt more accommodative monetary policies, further lowering real interest rates and indirectly increasing demand for gold allocation.

Concerns over the dollar’s reserve status are also rising. When the dollar faces depreciation pressure or market confidence wavers, gold priced in dollars often benefits, attracting more capital inflows. Additionally, geopolitical risks—such as the ongoing Russia-Ukraine conflict and tensions in the Middle East—continue to elevate market demand for safe-haven assets.

How Do Professional Institutions View Gold’s 2025 Outlook?

Despite recent volatility, major global financial institutions remain optimistic about gold’s long-term prospects.

J.P. Morgan Commodity Research believes the recent correction is a “healthy technical adjustment,” and is more bullish on medium- to long-term performance. The team has raised its gold price target for Q4 2026 to $5,055 per ounce.

Goldman Sachs continues to reaffirm its bullish stance, maintaining a target of $4,900 per ounce by the end of 2026.

Bank of America strategists have expressed a more aggressive view, raising their 2026 target to $5,000, even hinting that gold could hit a new high of $6,000 per ounce in 2025.

Looking at the spot prices, well-known jewelry retailers like Chow Tai Fook, Luk Fook Jewelry, and Chao Hong Ji still offer gold jewelry at reference prices above 1,100 RMB per gram, with no significant decline, reflecting ongoing market recognition of gold’s value.

Can Retail Investors Still Participate Now?

After understanding the driving logic behind gold’s trend, the practical question arises: Is now still a good time to enter?

The answer is not simply yes or no but depends on your investment type and risk tolerance.

For experienced short-term traders, the current volatile market offers many opportunities. Gold markets are highly liquid, and short-term directions are relatively easier to judge. During periods of significant volatility, the shift between bullish and bearish momentum becomes more apparent. However, it’s crucial to use tools like economic calendars to seize opportunities around key U.S. economic data releases.

For novice traders, it’s advisable to start with small amounts and avoid blindly increasing positions. Gold’s volatility is comparable to stocks—annual average amplitude is as high as 19.4%, compared to 14.7% for the S&P 500. Beginners are prone to chasing high during surges and panicking during drops, which can lead to losses.

For those planning to hold physical gold long-term, be prepared for substantial fluctuations along the way. Gold’s investment cycle is very long; only holding for over ten years can truly realize its value preservation and appreciation. During this period, prices may double or be cut in half.

For investors wanting to allocate gold in their portfolios, this is feasible but should not be overly concentrated. Gold should be part of diversified assets rather than a sole focus. Also, note that physical gold trading costs are relatively high—typically between 5%–20%—which directly impacts actual investment returns.

Experienced investors can also consider a hybrid strategy, holding gold long-term while using price volatility for short-term trading, especially around U.S. data releases when fluctuations tend to amplify. This requires technical analysis skills and disciplined risk management.

Final Risk Warning

Although the overall trend of gold is upward, it’s important to recognize that such precious metals assets are quite volatile. Pay special attention to sharp fluctuations around U.S. economic data releases and Federal Reserve meetings. For investors in Taiwan and other non-USD regions, exchange rate risk must also be considered, as USD fluctuations against local currencies will affect final returns.

In summary, gold’s outlook in 2025 still has room to rise, but participation should match your investment experience and risk appetite. Avoid blindly following the trend.