## 2025 Gold Price Trend Observation: Market Logic After the $4400 Mark

Since gold prices hit a historic high of $4400 per ounce in October this year, the market has experienced a pullback, but this rally is far from over. According to Reuters data, the cumulative increase in gold prices in 2024-2025 approaches the highest levels in nearly 30 years, surpassing the performance of 2007 and 2010. What is driving the continued rise of gold? What will the future price trend look like? We need to analyze the fundamental market factors one by one.

## The Three Core Drivers Sustaining the Rise in Gold Prices

**Tariff Policies Triggering Increased Safe-Haven Demand**

Since the beginning of 2025, a series of tariff policies have been continuously released, directly increasing market uncertainty. Historical experience shows that during periods of policy uncertainty, such as the US-China trade war in 2018, gold prices typically record short-term gains of 5-10%. Currently, market risk aversion has clearly intensified, becoming a direct catalyst for pushing XAUUSD prices higher.

**Weak US Dollar and Rate Expectations Working Together**

The Federal Reserve's rate cut expectations are a key variable in gold's trend. Rate cuts lead to a depreciation of the US dollar, reducing the opportunity cost of holding gold and significantly increasing its attractiveness. According to CME interest rate futures data, the probability of a 25 basis point rate cut at the next Fed meeting is 84.7%. It is important to note that there is a clear negative correlation between interest rates and gold prices—**when rates fall, gold tends to strengthen**. Changes in real interest rates (nominal rate minus inflation) directly influence gold's appeal as an asset.

**Global Central Banks Continuing to Increase Gold Reserves**

According to the latest report from the World Gold Council(WGC), net gold purchases by central banks in Q3 2025 reached 220 tons, a 28% increase quarter-over-quarter. In the first nine months, total gold purchases amounted to approximately 634 tons, still well above historical averages. The survey by the association shows that 76% of central banks expect to increase the proportion of gold in their reserves over the next five years, while also expecting the share of US dollar reserves to decline. This reflects a re-recognition of gold's role as a reserve asset in the global financial system.

## Other Factors Supporting Long-Term Gold Trends

**Global High Debt Environment Limiting Policy Space**

As of 2025, global debt totals $307 trillion. High debt levels constrain countries' flexibility in interest rate policies, leading to more accommodative monetary policies, which in turn depress real interest rates and indirectly reinforce gold's value preservation and allocation appeal.

**US Dollar Confidence Fluctuations and Geopolitical Risks**

When confidence in the US dollar declines, gold priced in dollars tends to benefit. Ongoing conflicts such as the Russia-Ukraine war and rising geopolitical risks in the Middle East drive investors to increase demand for safe-haven assets, making gold a natural choice.

**Community Sentiment and Short-Term Capital Inflows**

Continuous media coverage and social discussions strengthen market sentiment, attracting large amounts of short-term capital to enter regardless of cost, creating a self-reinforcing upward trend. However, such factors usually only drive short-term volatility and do not necessarily indicate a sustained long-term trend.

## Mainstream Institutional Forecasts for Gold Prices

Despite recent fluctuations, many top investment banks remain optimistic about gold's medium- and long-term prospects:

- **J.P. Morgan** considers this correction a "healthy adjustment" and has raised its Q4 2026 target price to $5055 per ounce.
- **Goldman Sachs** reiterates a target of $4900 per ounce by the end of 2026, maintaining a positive outlook.
- **Bank of America** previously raised its 2026 target to $5000, and recent strategists even suggest gold could break through $6000.

International jewelry brands' reference prices for pure gold jewelry also remain above RMB 1100 per gram, with no obvious decline, indirectly confirming market confidence in long-term gold prospects.

## Retail Investors' Gold Allocation Strategies

**Opportunities for Short-Term Traders**

If you have some trading experience, the current volatile market offers many short-term trading opportunities. The gold market is highly liquid, and technical analysis is relatively straightforward, especially with more intense fluctuations around US economic data releases. Using economic calendars to track US economic data can effectively support trading decisions.

**Risk Tips for Beginners**

Gold's average annual volatility reaches 19.4%, comparable to stocks. If you're new to the market, avoid blindly chasing high prices. It is recommended to start with small amounts to test the waters, learn risk control, and avoid heavy positions that could lead to psychological stress.

**Psychological Preparation for Long-Term Holders**

If you plan to buy physical gold for long-term allocation, be prepared to withstand significant fluctuations. Gold trading costs are relatively high (usually 5-20%), and the cycle can be very long. Over a holding period of 10 years or more, gold can indeed preserve and increase value, but it may also experience dramatic swings, doubling or halving in value.

**Balanced Portfolio Allocation**

Including gold in your investment portfolio is a good choice, but do not put all your assets into it. A wiser approach is to hold long-term while flexibly capturing short-term price movements for additional entries, especially when US market data releases cause increased volatility. This requires experience and risk management skills.

**Special Reminder**

Gold's volatility cycle is long, and short-term predictions are difficult. For Taiwanese investors, currency valuation of gold also needs to consider USD/TWD exchange rate fluctuations affecting actual returns. Diversification is recommended to avoid over-concentration in a single asset.

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The current logic of gold price trends is clear: macro uncertainties boost safe-haven demand, central bank accumulation provides structural support, and interest rate expectations drive short-term volatility. In the medium to long term, the fundamental factors supporting higher gold prices still exist, but in actual trading, caution is needed regarding short-term risks from US economic data and central bank policy announcements. Whether for short-term trading or long-term holding, rational analysis is better than blindly following the trend.