## Key Factors Influencing Gold Trends in 2025: Is There Still Room for Price Growth?

This year's gold performance has been impressive, reaching a historic high of $4,400 per ounce in October. Although a technical correction followed, market expectations for gold remain high. Many investors are asking the same question: **How long can this gold rally last? Is it already too late to enter now?**

To answer these questions, we must first understand the logic behind the fluctuations in gold prices. Only by grasping the true market drivers can we make more rational investment decisions.

### Why has gold performed so exceptionally?

From 2024 to 2025, gold has experienced a nearly 30-year record increase. According to Reuters, this rally has surpassed the 31% annual gain in 2007 and the 29% in 2010.

The main forces supporting the gold trend come from three aspects:

**First, increasing geopolitical and trade policy uncertainties**

The rapid implementation of tariff policies has directly heightened market risk expectations. When the policy environment is uncertain, safe-haven funds naturally flow into gold. Historical experience shows that similar periods of policy conflict (such as the US-China trade tensions in 2018) typically lead to a short-term rise of 5% to 10% in gold prices.

**Second, changing expectations of Federal Reserve monetary policy**

Real interest rates and gold prices have an inverse relationship. When the Fed cuts interest rates, the attractiveness of the US dollar declines, and the opportunity cost of holding gold decreases, thus boosting gold’s appeal.

Interestingly, after the September FOMC meeting, gold prices experienced a brief correction. The reason was that the 25 basis point rate cut was fully in line with expectations, which the market had already priced in. At the same time, Powell characterized it as a "risk management rate cut" without signaling ongoing easing, leading to market caution about future moves.

According to CME rate tools, the probability of the Fed cutting interest rates by another 25 basis points in December is 84.7%. Investors can use the FedWatch tool’s real-time data as an important reference for gold trend judgment.

**Third, continuous accumulation by global central banks**

Data from the World Gold Council (WGC) shows that in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. The total gold purchases in the first nine months were about 634 tons, slightly below the same period last year but still well above historical averages.

In WGC’s survey, 76% of responding central banks indicated they would "moderately or significantly increase" their gold holdings over the next five years, while most expect the "US dollar reserve ratio" to decrease accordingly. This trend provides strong long-term support for gold demand.

### Other factors driving gold prices

Besides the core drivers above, the following factors also play important roles:

**Global high debt environment constraints**

By 2025, global debt totals reach $307 trillion (IMF data). High debt levels limit countries’ room for interest rate adjustments, leading to a tendency to maintain accommodative monetary policies. Real interest rates remain under pressure, indirectly increasing gold’s allocation value.

**Reassessment of the US dollar’s reserve currency status**

When the dollar weakens or market confidence wanes, dollar-denominated gold assets tend to benefit, attracting more capital flows.

**Rising geopolitical risks**

Ongoing conflicts like Russia-Ukraine and tensions in the Middle East increase demand for safe assets, strengthening gold’s appeal as a traditional safe haven.

**Short-term capital sentiment**

Continuous media coverage and social media buzz lead to large inflows of short-term capital into gold, amplifying short-term volatility.

It’s important to note that these short-term factors can trigger sharp price swings and do not necessarily indicate a long-term trend continuation. For Taiwanese investors, USD/TWD exchange rate fluctuations will also directly impact final returns.

### Institutional Outlook on Gold Price Trends

Despite recent corrections, mainstream institutions remain optimistic about gold’s prospects:

**JPMorgan’s commodities team** believes the current pullback is a "healthy correction," with a long-term positive outlook. They have raised their Q4 2026 target price to $5,055 per ounce.

**Goldman Sachs** maintains their previous view, reaffirming a target of $4,900 per ounce by the end of 2026.

**Bank of America strategists** are the most bullish, raising their 2026 target to $5,000 per ounce, and further suggesting that gold could break $6,000 next year.

**Physical gold market signals** also support institutional views. Well-known jewelry brands like Chow Tai Fook, Luk Fook, Chao Hong Chi, and Chow Sang Sang still quote pure gold jewelry at over NT$1,100 per gram, with no obvious decline.

### Investor Strategies Based on Different Profiles

After understanding the logic behind gold trends, investors can decide whether to participate based on their own situation. It’s important to emphasize that the following are merely experiential insights and not investment advice.

**If you are a short-term trader**

Volatile markets are highly favorable for short-term operations. Liquidity is ample, and the direction of price movement is easier to judge. During sharp rises or falls, the forces of bulls and bears become clear, increasing profit opportunities. Experienced traders can follow the trend.

**If you are a novice investor**

Avoid blindly following the crowd. Start with small amounts to test the waters, then gradually increase positions as you become familiar with market rhythm. Tracking key US economic data via economic calendars helps identify trading opportunities. Be cautious—panic selling can lead to significant losses.

**If you want to hold physical gold long-term**

Prepare psychologically. Although the long-term outlook is bullish, significant volatility may occur. The annual fluctuation amplitude of gold averages 19.4%, comparable to the S&P 500’s 14.7%. Assess whether you can tolerate such volatility in advance. Additionally, transaction costs for physical gold typically range from 5% to 20%, so over-allocating is not advisable.

**If you want to include gold in your portfolio**

Allocate moderately but avoid over-concentration. Gold’s volatility is not lower than stocks; betting too much on it is unwise. Diversification helps balance risks.

**If you aim to maximize returns**

Consider a dual strategy of "long-term holding + short-term trading." Hold gold while taking advantage of short-term peaks around US market data releases for trading. This requires some trading experience and risk management skills.

### Final Reminders

- Gold’s volatility should not be underestimated; an average annual fluctuation of 19.4% exceeds many stock indices.
- Gold’s return cycle is long; holding for over 10 years is necessary to fully realize value preservation and appreciation, but it may double or halve during that period.
- Transaction costs for physical gold are relatively high; over-allocating is not recommended.
- The principle of diversification always applies; avoid concentrating all capital in a single asset.

Overall, gold in 2025 still has upward potential, but investment decisions should be based on individual risk tolerance and time horizon. Blindly chasing the rally only increases the risk of losses.