## 2025 Gold Investment Map: Is Paper Gold Better? Will Gold Prices Continue to Rise?

As we enter 2025, global markets remain volatile, and gold once again becomes a focal point for investors. Since hitting a record high of $4,400 per ounce in October last year, gold prices have pulled back slightly, but market enthusiasm remains strong. Many investors are asking the same question—**Can gold prices keep climbing? Is it too late to enter now? Is paper gold better?**

To answer these questions, the key lies in understanding the logic behind the factors driving gold price movements. This article will analyze the core influences on gold trends and offer practical investment advice.

### Why Has Gold Become the Investment Darling of 2025?

Over the past two years, gold has shown remarkable upward momentum. According to Reuters data, **the gold price increase in 2024-2025 is approaching the highest in 30 years**, surpassing 2007’s 31% and 2010’s 29%. What deep-seated drivers are behind this rally?

**Policy Uncertainty Sparks a Safe-Haven Rush**

Entering 2025, a new round of tariff policies has become the biggest variable in the market. Continuous policy adjustments have cast a shadow over the global economic outlook, significantly boosting risk aversion. Historical experience shows that during periods of policy uncertainty (such as the US-China trade war in 2018), gold often experiences short-term gains of 5-10%. When economic prospects become unclear, investors naturally turn to traditional safe-haven assets like gold.

**Chain Reaction of Falling Interest Rates**

The Federal Reserve’s rate-cutting policies have a profound impact on gold prices. Lower interest rates weaken the dollar’s attractiveness and reduce the opportunity cost of holding gold, thereby increasing its investment appeal. The underlying logic is simple: **Rate cuts → Gold rises**.

Real interest rates (nominal interest rate minus inflation) show a clear negative correlation with gold prices. When real rates decline, gold— which bears no interest income—becomes more attractive. CME interest rate tools indicate an 84.7% chance of the Fed cutting rates by 25 basis points in December, providing strong support for gold.

**Continued Central Bank Purchases**

The World Gold Council (WGC)’s latest report reveals an important trend: in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months, total gold purchases reached about 634 tons, slightly below the same period last year but still well above historical averages.

More notably, in WGC’s survey, **76% of responding central banks believe their gold holdings will increase moderately or significantly over the next five years**, while most expect their dollar reserves to decrease. This reflects a profound shift in global reserve asset allocation.

**Other Supporting Factors**

Global debt levels (reaching $307 trillion by 2025) limit the flexibility of national interest rate policies, with monetary policy tending toward easing, further depressing real interest rates. Meanwhile, declining confidence in the dollar, ongoing conflicts like the Russia-Ukraine war, tensions in the Middle East, and geopolitical risks all boost demand for gold as a safe haven. Continuous media and social media coverage also attract a large influx of short-term capital.

### How Do Experts View Gold Price Trends in 2025?

Despite recent volatility, mainstream global institutions remain optimistic about gold’s outlook. **J.P. Morgan’s commodities team** considers recent corrections as a “healthy adjustment,” raising their Q4 2026 target price to $5,055 per ounce.

**Goldman Sachs** maintains an optimistic stance, reaffirming a target of $4,900 per ounce by the end of 2026. **Bank of America** is even more aggressive, previously raising their 2026 gold target to $5,000, and recently suggesting that gold could break through $6,000 next year.

From the physical market perspective, well-known jewelry brands like Chow Tai Fook, Luk Fook, Chao Hong Ji, and Chow Sang Sang still quote their pure gold jewelry prices at **1,100 yuan/gram** or above, with no significant decline. These signs indicate that the long-term support for gold remains solid.

### Strategies for Different Investors

After understanding the logic behind gold’s rise, the key question becomes: **How should I operate?** This depends on your investment style and risk tolerance.

**Short-term Traders**

If you have some market experience, the current volatility environment offers excellent trading opportunities. Liquidity is ample, and the direction is relatively clear, especially during sharp rises or falls, where bullish and bearish forces are obvious. For traders familiar with technical analysis, riding this wave is not difficult.

However, novice investors should avoid blindly following the trend. Gold’s average annual volatility is 19.4%, comparable to stocks at 14.7%. Beginners tend to chase high prices or sell at lows, repeatedly incurring losses. It’s advisable to start with small amounts and use economic calendars to track US economic data to inform trading decisions.

**Long-term Holders**

If you plan to buy physical gold as a long-term asset, be prepared for significant fluctuations. Although the long-term trend is upward, there could be 30-50% corrections along the way. Gold’s investment cycle is very long—buying it as a store of value requires a horizon of 10 years or more, during which it could double or be cut in half.

Additionally, transaction costs for physical gold are relatively high (usually 5-20%), so it’s not recommended to invest too much. For Taiwanese investors, fluctuations in USD/TWD exchange rates should also be considered.

**Considerations for Paper Gold**

Compared to physical gold, **is paper gold better?** It depends on your specific needs. Paper gold (such as futures, spot XAUUSD, etc.) offers lower transaction costs, high liquidity, and the ability to buy and sell instantly, making it especially suitable for short-term trading. But it also involves leverage risk, requiring strict risk management. When choosing paper gold, prioritize regulated platforms with good liquidity.

**Portfolio Allocation Strategy**

Gold plays an important role in a diversified portfolio but should not constitute the entire allocation. A typical recommendation is 5-15% of your total investment in gold to achieve risk diversification. Advanced investors can even leverage short-term price fluctuations for arbitrage on top of long-term holdings, especially during periods of high volatility around US economic data releases. However, this requires substantial experience and risk control skills.

### Tips for Investing in Gold

- **Don’t underestimate volatility risk**: Gold’s annual volatility is nearly 20%, comparable to stocks. Sharp swings are common around economic data releases and central bank meetings.

- **Time horizon is crucial**: Gold’s long-term trend is upward, but medium-term fluctuations are normal. If your time horizon is less than 10 years, volatility may offset expected gains.

- **Hidden costs of trading**: Buying and selling physical gold incurs high costs, and frequent trading can eat into profits. In contrast, paper gold costs are more transparent and lower.

- **Avoid concentrated bets**: Regardless of the form, gold should not be your only investment. Diversification remains the cornerstone of prudent investing.

Overall, 2025 offers investment opportunities in gold, but risks are also present. The key is to choose suitable participation methods based on your ability and risk appetite. Whether physical or paper gold, cautious decision-making and rational operation are the long-term keys to steady investment success.