Will gold prices continue to rise after breaking through $4400? The 2025 gold investment guide is here.

When Will Gold Prices Drop? This is probably the most concerned question among recent investors. After approaching a historic high of $4,400 per ounce in October, gold has experienced a correction, but market enthusiasm remains strong. Many are conflicted: is now the time to buy the dip or to take profits?

Why Has Gold Been Rising Continuously? Three Major Drivers Supporting the Price

Talking about this round of gold market, it’s like a pig on a windmill. The gold price from 2024 to 2025 has increased by nearly 30%, the highest in nearly 30 years, surpassing the 31% in 2007 and 29% in 2010. Behind this are three forces driving the rally.

First Driver: Market Uncertainty Caused by Trump’s Tariff Policies

Continuous tariff policies have heightened risk aversion sentiment. Historical experience (such as the 2018 US-China trade war) shows that during periods of policy uncertainty, gold usually sees a short-term increase of 5–10%. When the market panics and everyone seeks a safe haven, gold becomes the go-to asset.

Second Driver: Expectations of Federal Reserve Rate Cuts

Cutting interest rates weakens the US dollar, reducing the opportunity cost of holding gold, thus increasing its attractiveness. Interestingly, after the September FOMC meeting, gold prices actually fell because the 25 basis point rate cut was fully in line with expectations and had been priced in by the market. Additionally, Powell did not hint at continued rate cuts in the future, leading to a wait-and-see attitude among investors.

Here’s an important logical point: Real interest rate = Nominal interest rate − Inflation rate. When rates fall, gold tends to rise. According to CME rate tools, the probability of a 25 basis point rate cut by the Fed in December is as high as 84.7%. You can use FedWatch data changes to judge the trend of gold prices.

Third Driver: Global Central Banks Are Frenziedly Increasing Gold Holdings

According to WGC reports, in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months, central banks have accumulated about 634 tons of gold. Even more interesting, 76% of surveyed central banks believe that the proportion of gold in their reserves will be “moderately or significantly increased” over the next five years, while also expecting the US dollar reserve ratio to decline. This indicates a solid long-term support for gold prices.

Other Factors Contributing to the Rally

Besides the three major drivers above, factors such as high global debt levels (USD 307 trillion), inflation pressures, declining trust in the US dollar, geopolitical risks (Russia-Ukraine war, Middle East conflicts), and even social media sentiment are driving short-term capital into the gold market. But note that, short-term volatility does not necessarily mean a long-term trend will continue, and for Taiwanese investors, currency fluctuations between USD and TWD should also be considered.

How Do Institutions View When Gold Will Drop or Rise?

Despite recent volatility, long-term institutional forecasts remain optimistic. JPMorgan has raised its Q4 2026 target price to $5,055 per ounce; Goldman Sachs reaffirmed a target of $4,900 by the end of 2026; Bank of America even suggested gold could hit $6,000 next year. Jewelry brands like Chow Tai Fook and Luk Fook still quote the reference price for 24K gold jewelry in mainland China above 1,100 RMB/gram, with no significant decline.

The logic behind these forecasts is clear: gold maintains its status as a “trustworthy” global reserve asset, and the medium- to long-term support factors remain unchanged. But a reminder: Always be cautious of short-term fluctuations, especially before and after US economic data releases and Federal Reserve meetings.

Is It Still a Good Time to Buy Gold? A Retail Investor’s Guide

After understanding the logic of the rally, it’s clear that this gold market isn’t over yet. There are opportunities both in the short-term and medium-to-long-term. But don’t follow the crowd blindly or chase high prices, especially for beginners who might add positions recklessly during volatility, risking significant losses.

If you are a short-term trader: Volatility is your best friend. Liquidity is good, and the direction of movement is relatively easier to judge. But this requires experience and risk management skills. Beginners should start with small amounts to test the waters and learn to track US economic data via economic calendars.

If you want to buy physical gold for the long term: Be prepared to endure significant fluctuations. Gold’s annual volatility averages 19.4%, which is not less than stocks, and the cycle can be very long—within ten years, it could double or be halved. Transaction costs for physical gold are relatively high (5%–20%), so don’t put all your eggs in one basket.

If you want to allocate it in your investment portfolio: It’s certainly possible, but remember that gold’s volatility is not low. Putting all your assets into gold is not wise. Diversification is safer.

Want to maximize returns? You can hold long-term while also taking advantage of price swings for short-term trading, especially during periods of increased volatility around US data releases. But this requires experience and risk control.

In summary, it’s very difficult to precisely predict when gold prices will fall. But as long as you understand the underlying logic, avoid blindly following trends, and make decisions based on your risk tolerance and investment horizon, you can find suitable opportunities in this gold rally.