Will gold prices reach new highs again in 2025? A comprehensive analysis of influencing factors and investment strategies

Current Gold Price Trends: Riding the Wave or Facing Cold Winds at the Peak?

Since 2025, gold prices have performed strongly, with gains approaching 40%. This upward trend is mainly driven by three key factors: escalating geopolitical risks, a weakening US dollar, and expectations of global rate cuts. However, after reaching a historic high in April, gold has retraced about 6%. Does this mean the correction is already underway? The common investor concern is: Will the gold price continue to rise, or is it time to wait and see?

Methodology for Gold Price Forecasting: Analyzing from Three Perspectives

Macroeconomic Factors: How Policies and Geopolitics Influence Gold Prices

From a macro perspective, the key variables for 2025 gold price forecasts include:

The Double-Edged Effect of Geopolitical Risks

Conflicts in Ukraine, Middle East tensions, and major trade frictions among great powers all reinforce gold’s “safe-haven asset” status. Historically, during the 1973 oil crisis, 2001’s 9/11 attacks, and after the outbreak of the Ukraine war in 2022, gold prices saw significant increases. When markets are filled with uncertainty, investors tend to allocate more to gold to protect their assets.

But can this protective demand persist? If geopolitical tensions ease and rate cut expectations fade, gold prices may lose support.

Fed Rate Cut Expectations vs. Actual Economic Performance

Lower interest rates in the US generally benefit gold, as reduced yields make interest-bearing assets (like bonds) less attractive. Meanwhile, central banks in emerging markets continue to increase their gold reserves, boosting demand.

However, recent global economic data has been better than expected, which could weaken market expectations for aggressive rate cuts. Investors need to balance “recession fears” against “economic resilience.”

The Critical Role of the US Dollar

Gold is priced in USD; thus, dollar appreciation or depreciation directly impacts international investors’ purchasing power. Between 2003-2007, the dollar depreciated steadily, and gold prices tripled during that period. The current weak dollar environment supports gold prices, but if the dollar rebounds, this support may vanish.

Technical Analysis: Mixed Signals in Short- and Medium-Term Trends

From chart analysis, gold shows a “mixed bag” of signals:

Short-term Optimism: MACD indicator trending upward, the 9-day moving average above the 21-day, indicating short-term bullish momentum. However, trading volume faces noticeable resistance around $3,500, suggesting a breakout may not be easy.

Medium-term Warning Signs: The Relative Strength Index (RSI) approaches overbought levels, and MACD shows a bearish crossover. Bollinger Bands are expanding, indicating increased volatility, which often signals uncertainty about the direction.

Overall, gold is in a phase of “uptrend still intact but facing short-term correction pressures.” This presents opportunities for different investors: momentum traders may face risks, while patient investors waiting for a pullback could find better entry points.

Historical Cycles: Seasonal and Election Effects

Gold prices exhibit clear cyclical patterns:

• Seasonality: Typically rising from August to February, linked to wedding seasons in India and China, as well as Christmas jewelry demand.
• Four-year cycle: Related to US presidential election years. Historical data shows significant gains during election years or the following year.
• Medium- and long-term cycles: 6-month and 8-year cycles also merit attention, though these are more academic in nature.

It’s important to note these cycles reflect probabilities, not certainties. External events can disrupt established patterns, so relying solely on historical cycles for decision-making carries risks.

To Buy Now or Wait? Weighing the Pros and Cons

Reasons Supporting Entry Now

1. Uptrend Unbroken: Despite recent corrections, the long-term upward channel since July 2024 remains intact, indicating a structurally bullish outlook.

2. Genuine Safe-Haven Demand: As long as geopolitical uncertainties persist, demand for gold will not vanish.

3. Multiple Catalysts: Central bank gold purchases, rate cut expectations, and dollar depreciation continue to support prices.

4. Portfolio Diversification: Regardless of short-term fluctuations, gold remains a valuable safe-haven asset in a diversified portfolio.

Rational Reasons for Waiting

1. Risks After 40% Gains: The recent surge is overextended; technical indicators show overbought conditions, increasing correction likelihood.

2. Fundamentals Are Not Fully Optimistic: Global economic growth remains resilient; rate cut cycles may not be as aggressive as expected.

3. Potential Risks: If geopolitical tensions ease, the dollar strengthens, or inflation is well-controlled, gold prices could test lower levels.

A Balanced Approach

For most investors, neither blindly chasing highs nor waiting entirely on the sidelines is advisable. A “staggered entry” strategy—buying some at higher levels and more at potential support zones—allows participation in the upside while reducing risk.

Major Forms of Gold Investment: A Comparison

Option 1: Physical Gold

Advantages:

• Tangible asset, providing psychological comfort
• Fully independent of the financial system
• Last-resort hedge during crises
• Globally recognized store of value

Disadvantages:

• Storage and insurance costs are high
• Liquidity can be limited
• Risks of theft and damage
• No interest income

Suitable for: Conservative investors preferring physical assets, those worried about systemic risks, or seeking ultimate safety.

Option 2: Gold ETFs and Funds

Features: The most convenient paper gold form, tracking spot gold prices, with low costs and high liquidity.

Advantages:

• No storage concerns
• Flexible trading with low costs
• Suitable for medium-term holding
• Managed by professionals

Disadvantages:

• Subject to counterparty risk of financial institutions
• Management fees apply
• Cannot be stored offline

Suitable for: Investors valuing convenience and cost-efficiency, traders needing quick position adjustments, or those seeking diversified exposure via funds.

Option 3: Gold Stocks

Refers to shares of gold mining companies. Their prices are influenced not only by gold prices but also by company earnings, management, and mineral reserves.

Features: Higher volatility but potential for higher returns. A leveraged way to invest in gold.

Suitable for: Investors with high risk tolerance, seeking excess returns, and capable of analyzing company fundamentals.

Option 4: CFDs( (Contracts for Difference)

Derivative trading that predicts gold price movements without owning physical gold. Supports both long and short positions with leverage.

High-Risk Characteristics:

• Leverage amplifies both gains and losses
• Suitable for experienced short-term traders
• Requires precise market analysis and strict risk management

Suitable for: Professional traders, high-risk investors, and those aiming for short-term gains.

) Comparative Table

Deep Drivers Behind Gold Prices

Geopolitical Risk Premium

Whenever international tensions escalate, safe-haven buying surges, pushing gold prices higher. This is not hype but market rationality in pricing uncertainty.

Inflation Hedge Function

Although the relationship between inflation and gold is complex (low inflation periods can also see rising gold prices due to low interest rates), long-term gold remains an effective tool against purchasing power erosion. During stagflation in the 1970s, US inflation hovered between 6-12%, while gold prices rose from $300 to over $2,700.

USD Weakness as an Inverse Indicator

The US dollar, as the global reserve currency, directly influences the attractiveness of dollar-priced commodities. When the dollar weakens, foreign investors find it cheaper to buy gold with their local currencies, increasing demand.

Central Bank Reserves

Central banks worldwide continue to increase their gold holdings as part of foreign exchange diversification. This structural demand provides a floor for gold prices.

Investment Framework for Gold in 2025

For Conservative Investors: Consider allocating 5-10% of your long-term safe-haven assets to gold. Options include ETFs to reduce costs or small physical gold coins as psychological anchors.

For Aggressive Investors: Watch for retracements at key technical support levels. If gold tests around $3,300 and holds, consider increasing positions. Keep an eye on macroeconomic data releases and be ready to act around major events.

For Traders: Increased short-term volatility offers opportunities for spread trading. However, strict stop-losses are essential, as the recent “overheated” rally may be followed by a correction.

Final Thoughts

Gold price forecasts are essentially informed guesses amid uncertainty. Whether bullish or bearish, they require dynamic adjustments.

Most analysts maintain a bullish stance based on current conditions, expecting gold to test around $3,700 before year-end. But this is not a promise—only a probabilistic estimate.

The real wisdom lies in:

• Not chasing highs or missing out
• Viewing gold as insurance in your portfolio, not just speculation
• Regularly reassessing your assumptions and adjusting flexibly
• Diversifying assets rather than timing a single one

Regardless of whether gold hits new highs, effective risk and mindset management remain the foundation of successful investing.