Analysis of Gold Trends in 2025: Will Gold Prices Continue to Rise or Reach a Peak?

Current Gold Price Situation Review

Entering 2024-2025, the gold market has become the focus of global investors. After reaching a historic high of $4,400 per ounce on October 20th, gold prices have pulled back, but the momentum of this rally remains strong. According to Reuters data, the gains in gold for 2024-2025 have approached a 30-year high—surpassing 31% in 2007 and 29% in 2010. What does this mean? It indicates that this is not a typical cyclical fluctuation but a deeper market signal at play.

Three Major Drivers Behind the Surge in Gold Prices

Expectations of Falling Interest Rates as the Core Support

The policy moves of the Federal Reserve directly influence gold’s attractiveness. According to CME interest rate tools, there is an 84.7% probability of a 25 basis point rate cut at the December meeting. Why is a rate cut so critical for gold prices? Because gold prices have an inverse relationship with real interest rates—when rates fall, the opportunity cost of holding gold decreases, prompting capital inflows. Historical data shows that for every 100 basis point decline in real interest rates, gold often experiences a significant rise.

Uncertainty in Trade Policies Fuels Safe-Haven Sentiment

Under the new policy environment, successive tariff measures have introduced volatility into the market. Based on historical experience (such as the US-China trade war in 2018), during periods of policy uncertainty, gold prices typically record short-term gains of 5-10%. When economic outlooks become ambiguous, safe-haven assets become the preferred choice for institutions and individual investors.

Global Central Banks Continue to Increase Gold Reserves

The World Gold Council data shows that in Q3 2024, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. The total gold purchases in the first nine months reached approximately 634 tons, still well above historical averages. More notably, in the council’s survey report on central bank gold reserves, 76% of respondents expect to increase their gold holdings over the next five years, while most believe the proportion of US dollar reserves will decline. This signals a strong long-term strategic outlook.

Other Key Factors Driving Gold Prices

The global debt has reached $307 trillion (according to IMF data), and high debt levels limit policy space for countries, forcing monetary policy to remain accommodative, further depressing real interest rates. Geopolitical risks—such as the ongoing Russia-Ukraine conflict and complex Middle East situations—continue to boost safe-haven demand. Additionally, shaken confidence in the US dollar makes gold, as a dollar-denominated asset, relatively more attractive.

It is also important to note that media coverage and social media sentiment are amplifying short-term capital inflows, increasing price volatility.

Institutional Outlook? Summary of Professional Predictions

Despite recent fluctuations, mainstream institutions remain optimistic about gold’s medium- to long-term prospects:

JPMorgan’s commodities team characterizes 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 by the end of 2026, implying further upside potential.

Bank of America is more aggressive, raising its 2026 target price to $5,000 and even suggesting that gold could break through the $6,000 mark.

Jewelry brands such as Chow Tai Fook and Luk Fook still quote stable retail prices for gold jewelry above 1,100 RMB/gram, indicating confidence in retail demand.

How Should Retail Investors Respond at This Stage?

If you are an experienced short-term trader: Volatile markets create opportunities for swing trading. High liquidity and clear long/short dynamics make short-term direction easier to judge. Use economic calendars to track US data releases and seize opportunities during periods of heightened volatility.

If you are a novice looking to do short-term trading: Start with small amounts and avoid blindly increasing positions. Gold’s annual volatility averages 19.4%, lower than US stocks at 14.7%, but still enough to cause significant losses for inexperienced traders. Once the mindset collapses, it often leads to chasing highs and selling lows.

If you want to allocate physical gold for long-term holding: Be prepared for large fluctuations. Gold as a store of value requires a holding period of over 10 years to realize its benefits; during this time, it could double or be halved. Additionally, physical transaction costs can be as high as 5-20%, so thorough calculations are necessary.

If you aim to maximize returns: You can combine long-term holdings with short-term trading based on price fluctuations, especially around US market data releases, where volatility is most pronounced. However, this requires solid risk management skills.

Key reminder: Gold cycles are very long. Do not allocate all your funds to a single asset. Diversification remains the more prudent choice. The current rally in gold prices is not over; both medium- and short-term opportunities exist, but only with rational analysis rather than chasing the market.