The truth behind the surge in gold prices: Is there still a chance in 2025?

The global markets in 2024-2025 are full of twists and turns, and gold has once again become the focus of investors. From breaking through $4,400 in October to hit a record high, followed by a pullback, the market is filled with questions about the future trend of gold prices. To find the answers, we need to first understand the logic behind this round of gold market rally.

Why Is Gold Prices Soaring? Revealing the Three Main Drivers

According to Reuters, the gold price increase in 2024-2025 has approached the highest level in nearly 30 years, surpassing 31% in 2007 and 29% in 2010. This surge is not accidental but driven by multiple factors working together.

The First Driver: Safe-Haven Demand Driven by Policy Uncertainty

The chain reaction from tariff policies directly ignited this year’s gold price rally. Historical experience (referencing the US-China trade war in 2018) shows that during periods of policy uncertainty, gold typically experiences a short-term increase of 5-10%. As risk aversion rises, capital flows instinctively into gold, regarded as the “ultimate safe-haven asset.”

The Second Driver: Changing Expectations of Interest Rate Trends

The Federal Reserve’s interest rate cut prospects directly impact gold prices. When interest rates decline, the opportunity cost of holding gold decreases, making gold more attractive. According to CME interest rate futures data, there is an 84.7% chance that the Fed will cut rates by 25 basis points in December.

Historical trends of gold reveal a clear pattern: gold prices are significantly negatively correlated with real interest rates. Real interest rate = nominal interest rate - inflation rate. When rate cut expectations heat up, gold prices tend to move accordingly, which is why many investors closely watch Fed decisions.

The Third Driver: Central Bank Gold Reserve Expansion

According to data from the World Gold Council (WGC), in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months of 2025, central banks accumulated about 634 tons of gold.

More notably, the WGC released a survey indicating that: 76% of responding central banks plan to increase their gold holdings as a proportion of total reserves over the next five years, while most expect the dollar reserve ratio to decline. This reflects potential changes in the international monetary system and provides long-term support for gold.

What Other Factors Are Contributing?

Loose monetary policy expectations amid high global debt

By 2025, global debt totals $307 trillion (IMF data). High debt levels limit countries’ flexibility in interest rate policies, favoring easing measures, which further depress real interest rates and indirectly boost gold attractiveness.

Fluctuations in confidence in the US dollar

Gold is priced in USD. When market confidence in the dollar weakens or the dollar depreciates, gold benefits and often attracts more capital inflows.

Geopolitical uncertainties

Ongoing Russia-Ukraine conflict and escalating Middle East tensions continually boost safe-haven demand for precious metals, causing short-term volatility.

Social media amplification

Continuous media coverage and community interactions stimulate large short-term capital inflows into gold markets, intensifying the surge.

How Do Top Institutions View Gold Trends in 2025?

Despite recent volatility, major investment institutions remain optimistic about gold’s outlook.

J.P. Morgan’s commodities team considers this correction a “healthy adjustment,” raising their Q4 2026 target price to $5,055 per ounce.

Goldman Sachs maintains an optimistic outlook, reaffirming their 2026 end-of-year target of $4,900 per ounce.

Bank of America is even more bullish, raising their 2026 target to $5,000 per ounce, with strategists suggesting gold could hit $6,000 next year.

Domestic jewelry chains (such as Chow Tai Fook, Luk Fook, Chao Hong Ji, etc.) still quote fine gold jewelry at over NT$1,100 per gram, with no significant decline, indicating market confidence remains.

Should Retail Investors Enter Now? What Should They Do?

After understanding the logic behind gold’s trend, the next question is: should you enter the market? The answer depends on your investment style and risk tolerance.

If you are an experienced short-term trader

Volatile markets provide excellent trading opportunities. Liquidity is ample, and the direction of price movement is relatively easier to judge, especially during sharp surges or drops, where bullish and bearish forces are clear. But beginners should avoid blindly following the trend—start with small amounts to test the waters, and avoid over-leveraging, as it can lead to emotional breakdowns and significant losses.

If you want to allocate physical gold as a long-term asset

Be prepared for intense volatility. Gold’s annual average fluctuation amplitude is 19.4%, comparable to stocks at 14.7%. Physical gold also involves higher transaction costs, generally between 5%-20%. Taiwanese investors should also consider the impact of USD/TWD exchange rate fluctuations on returns.

If you want to include gold in your investment portfolio

This is certainly feasible, but don’t put all your assets into it. Gold’s volatility is relatively high, so diversification remains the best strategy.

If you want to combine long-term holding with short-term trading opportunities

You can hold long-term positions and seize short-term opportunities around US market data releases to capitalize on amplified volatility. However, this requires experience and risk management skills.

Important Reminders

Gold’s cycle is unusually long—achieving preservation goals requires a horizon of over 10 years. During this period, prices may double or be cut in half. Short-term policy changes, economic data, and announcements can cause intense fluctuations. Always be vigilant about risks in actual trading and avoid blindly chasing highs.

Choose a reputable gold trading platform, set reasonable stop-loss and take-profit levels, and avoid blindly chasing rallies. Opportunities still exist in gold’s trend; the key is to find a participation method that matches your risk tolerance.