2025 Gold Outlook Analysis: Why Are Today’s Gold Prices Per Tael Continuing to Rise?

Since last year until now, the international gold market has been tumultuous. After breaking through $4,300 and reaching new highs, market attention remains undiminished. Many investors are pondering the same question: Will this round of gold price increases continue? Is it too late to enter now?

To answer this question, we first need to understand the true logic behind the surge in gold prices.

Why has gold XAU/USD become a market focus?

According to Reuters data, recent gold gains have hit a nearly 30-year high, surpassing the 31% in 2007 and 29% in 2010. This is not a coincidence but the result of multiple factors stacking up.

The first key factor: Policy uncertainty driving safe-haven demand

This year, a series of tariff policies have triggered widespread market concerns. Whenever policy variables change, investors flock to safe-haven assets like gold. Historical data shows that during similar periods of policy uncertainty (such as trade tensions in 2018), gold typically records short-term gains of 5-10%.

The second key factor: Expectations of interest rate policy changes

The Federal Reserve’s rate cut expectations have a profound impact on gold’s attractiveness. When interest rates fall, the opportunity cost of holding gold decreases, pushing up its price. According to CME interest rate tools, the probability of a 25 basis point rate cut at the next Fed meeting is 84.7%.

More notably, there is a clear inverse relationship between gold prices and real interest rates. The lower the real interest rate, the more attractive gold becomes. This also explains why gold price fluctuations always closely follow expectations of Fed policy changes.

The third key factor: Continued accumulation by global central banks

The World Gold Council reports that in the first three quarters of 2025, global central banks net purchased about 634 tons of gold, and 76% of surveyed central banks plan to increase their gold reserves over the next five years. This trend reflects the increasing importance placed on gold by central banks worldwide and also signals a gradual adjustment of the US dollar’s position.

What other factors support gold prices rising?

Besides the three main drivers above, other structural factors should not be overlooked:

Global debt levels and monetary policy tendencies: By 2025, global debt will reach approximately $307 trillion. High debt levels limit policy flexibility for countries, making monetary policy more likely to favor easing, which can lower real interest rates and indirectly boost gold’s appeal.

Confidence in the US dollar wavers: When the dollar weakens or market confidence declines, gold priced in USD benefits and attracts capital inflows more easily.

Long-term geopolitical uncertainties: Ongoing conflicts like Russia-Ukraine and Middle East tensions continue to reinforce safe-haven demand.

Market sentiment and capital flows: Continuous media coverage and social media effects accelerate short-term capital inflows, creating a self-reinforcing upward trend.

It is important to be cautious that these factors may cause sharp volatility in the short term. For Taiwanese investors, the USD/TWD exchange rate also needs to be considered when investing in foreign-currency-denominated gold.

How do top international institutions view the gold outlook?

Despite recent fluctuations in gold prices, mainstream institutions remain optimistic:

J.P. Morgan considers this correction a “healthy adjustment” and sets a target price of $5,055 per ounce by the end of 2026.

Goldman Sachs reaffirms its target of $4,900 per ounce by 2026, maintaining a stable bullish stance.

Bank of America’s strategists are even more optimistic, expecting gold to surge toward $6,000 next year, and have raised their 2026 target to $5,000 per ounce.

From the physical gold market perspective, well-known brands like Chow Tai Fook and Luk Fook Jewelry’s reference prices for pure gold jewelry remain above 1100 TWD/gram, with no obvious decline, reflecting market confidence in gold prices.

How should retail investors respond now?

There are still opportunities to enter, but different types of investors should adopt different strategies:

For experienced short-term traders

Volatility itself is an opportunity. With ample liquidity and clearer price directions, especially during sharp rises and falls, the forces of bulls and bears become obvious. Experienced traders can benefit from this.

For novice investors

Start with small amounts to test the waters; never blindly add more. The most common mistake for beginners is chasing high prices or cutting losses at lows, which can lead to significant losses after repeated attempts. Use economic calendars to track key US data releases as auxiliary references for trading decisions.

For long-term holders

If planning to buy physical gold for long-term allocation, be prepared for significant fluctuations. Although the overall upward trend remains unchanged, intense volatility tests investors’ patience.

For portfolio allocators

Gold can be included in a diversified portfolio, but do not put all your assets into it. Gold’s annual volatility averages 19.4%, comparable to the S&P 500’s 14.7%, indicating non-negligible risk.

For those seeking maximum returns

You can hold long-term positions and use price fluctuations for short-term trading, especially around US data releases, where volatility tends to be most pronounced. This requires experience and risk management skills.

Important reminder

Gold’s cycle is very long. Buying as a hedge requires a time horizon of over 10 years to see the full picture, but within that period, prices could double or halve. Transaction costs for physical gold are relatively high, generally between 5% and 20%, and should not be ignored.

While daily gold price movements reflect short-term market sentiment, true investment logic should be based on medium- to long-term fundamental analysis. Blindly following the trend without thorough thinking makes one most vulnerable to market volatility.

Whatever investment strategy you choose, remember one principle: do not put all your eggs in one basket. Diversification is the key to long-term success.