How will international gold perform in 2025? Analyzing the correction after the historical new high to identify future market opportunities

The recent international gold market remains hot. After reaching a record high near $4,400 per ounce in October, a correction followed. However, this has left many investors feeling conflicted—should I still buy in now? Instead of blindly following the trend, it’s better to understand the logic behind this round of market movements.

Why is international gold so strong? Analyzing from three perspectives

In the past two years, gold has been unstoppable, and this year it has broken through the $4,300 mark to hit new highs. According to Reuters data, the gold price increase in 2024-2025 is approaching the highest level in 30 years, surpassing 31% in 2007 and 29% in 2010. This performance is enough to turn heads.

But the rise in gold is not without cause. The market points to three main drivers:

First driver: Policy uncertainty boosting safe-haven demand

Since the beginning of the year, successive tariff policies have directly stimulated risk aversion in the market. History shows that during similar policy battles (such as the US-China trade friction in 2018), gold typically experiences a short-term increase of 5-10%. The greater the uncertainty, the more funds flow into gold—this is the market’s instinctive response.

Second driver: Fluctuations in interest rate expectations

The Federal Reserve’s rate cut expectations are a key factor in determining the long-term trend of gold. An economic principle to understand here: the lower the real interest rate, the more attractive gold becomes. Why? Because gold does not generate interest, so when yields on other assets decline, the opportunity cost of holding gold decreases.

Interestingly, after the September FOMC meeting, gold actually fell, which seems counterintuitive. But a closer look reveals that a 25 basis point rate cut was fully expected and already priced in. More importantly, Powell characterized this rate cut as “risk management” rather than unconventional easing, without signaling further easing, causing the market to hold off on expecting rate cuts after December.

Based on CME interest rate tools, the probability of the Fed cutting rates by another 25 basis points in December has reached 84.7%. In other words, by watching this data, you can roughly judge the future direction of gold.

Third driver: Continued central bank accumulation

The World Gold Council’s report shows that in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. In the first nine months, central banks bought about 634 tons, slightly below the same period last year but still at a high level historically.

More interestingly, in a June survey on 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 dollar reserve ratio to decline. What does this indicate? The demand for diversified reserve assets is rising, and gold’s status as the ultimate trust asset is strengthening.

Other supporting factors: debt, exchange rates, geopolitical situations

Besides the three main drivers, some hidden forces are also pushing up international gold prices:

High debt levels limit policy space — Global debt has reached $307 trillion (IMF data). Countries are forced to adopt more accommodative monetary policies, which inevitably depress real interest rates, benefiting gold.

Weakening US dollar enhances gold attractiveness — When the dollar depreciates, gold priced in USD becomes cheaper, encouraging international funds to buy.

Geopolitical risks persist — Events like the Russia-Ukraine conflict, Middle East tensions, and other black swan events continuously stimulate safe-haven flows into precious metals.

Social media amplification — Continuous news coverage and community discussions can trigger irrational short-term capital inflows, causing rapid price increases.

Note: These short-term factors can cause significant volatility, but they do not necessarily indicate a long-term trend. For Taiwanese investors, the USD/TWD exchange rate should also be considered, as it may amplify or hedge returns.

What do institutions think? Target prices are being raised

Despite recent fluctuations, Wall Street giants remain optimistic about the long-term prospects of international gold:

• JPMorgan Commodity Team: Views this correction as a “healthy adjustment” and has raised its Q4 2026 target price to $5,055 per ounce.
• Goldman Sachs: Maintains an optimistic stance, reaffirming a target price of $4,900 per ounce by the end of 2026.
• Bank of America: More aggressively suggests that gold could even hit $6,000 next year, having previously raised its 2026 target to $5,000.

Looking at the prices given by jewelry brands, chain stores like Chow Tai Fook, Luk Fook, and Chao Hong Ji still quote above 1100 RMB per gram, with no significant adjustments, reflecting market confidence in gold’s medium-term outlook.

If you’re considering entering now, think through these points

Once you understand the logic behind gold price increases, investment decisions become clearer. But whether to buy now depends on who you are:

If you’re a short-term trader — Volatile markets are your playground. Ample liquidity, large swings, and relatively easy judgment of market direction mean more profit opportunities. The key is to track US economic data via economic calendars and seize opportunities before and after major releases.

If you’re a novice looking to play short-term — Honestly, this is the easiest way to get burned. Start with small funds to test the waters; avoid blindly adding more. Gold’s average annual volatility is 19.4%, higher than the S&P 500’s 14.7%. A sudden loss of confidence can lead to deep pitfalls.

If you want to hold physical gold long-term — That’s fine, but be prepared for significant fluctuations. Gold is indeed a store of value, but over a “ten-year period,” it could double or halve. Also, transaction costs for physical gold are high—5-20%—so avoid over-leveraging.

If you aim for maximum returns — Consider a strategy combining long-term holdings with short-term trading, especially when US data releases cause increased volatility. But this requires experience and risk management skills.

Final words of advice:

Gold is a “trust asset” globally, but short-term risks are not to be underestimated, especially around key US economic data releases and central bank meetings. Diversification always beats putting all your eggs in one basket. Never bet everything on gold. Remember, a cycle can last up to ten years, and each correction tests your psychological resilience.