Will gold still rise in 2025? Why are gold prices continuing to hit new highs based on the data

Since gold prices approached $4,400 per ounce in October, many investors are asking the same question: Will gold prices continue to rise? Is it too late to enter now?

Rather than blindly following the trend, it’s better to understand the logic behind this wave of gold price increases. Let’s analyze the true reasons behind the surge in gold prices one by one.

Why Are Gold Prices Accelerating in 2025? Three Major Driving Factors Cannot Be Ignored

Gold has risen to a 30-year high in the past two years

According to Reuters data, the gold price increase in 2024-2025 has approached the highest levels in nearly 30 years, surpassing 31% in 2007 and 29% in 2010. What forces are driving this rally?

Driving Factor 1: New government tariff policies trigger a safe-haven rush

Since Trump took office, a series of tariff policies directly ignited this rally. The continuous policy uncertainties heightened market risk aversion, pushing up gold prices. Historical experience shows that during periods of policy chaos (such as the US-China trade war in 2018), gold prices typically experience short-term gains of 5–10%.

Driving Factor 2: Expectations of Fed rate cuts trigger a chain reaction

The Federal Reserve’s rate cuts weaken the US dollar’s strength, reducing the opportunity cost of holding gold, thereby increasing its attractiveness. When the economy weakens, the pace of rate cuts may accelerate, which is beneficial for gold.

You might ask: Why did gold fall after the September FOMC meeting? The reason is that a 25 basis point rate cut was fully in line with market expectations and had been priced in beforehand. Powell described it as a “risk management rate cut,” without implying ongoing rate cuts, which instead caused market doubts about the future pace of rate reductions.

The inverse relationship between gold prices and interest rates

Historical data reveals a clear pattern:

Lower interest rates → Higher gold prices

Real interest rate = Nominal interest rate – Inflation rate. Every rate cut decision by the Fed directly affects the nominal interest rate, which in turn influences gold prices. That’s why you see gold price fluctuations almost entirely following expectations of Fed rate cuts.

According to CME interest rate tools, there is an 84.7% chance that the Fed will cut rates by 25 basis points at the December meeting. You can monitor this data via the FedWatch tool as an important reference for gold price trends.

Driving Factor 3: Global central banks’ gold reserve competition

According to the World Gold Council (WGC), in Q3 2024, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months, central banks accumulated about 634 tons of gold, slightly below the same period in 2023 but still significantly higher than other periods.

In its June 2025 central bank gold reserve survey, WGC indicated that 76% of surveyed central banks believe their gold holdings will “moderately or significantly increase” over the next five years. Meanwhile, most central banks also expect the proportion of US dollar reserves to decline. This suggests that global central banks are quietly changing their reserve compositions, with gold becoming a new choice.

Other Important Factors Driving Gold Prices

Helpless choice in a high-debt era

By 2025, global debt has reached $307 trillion. High debt levels limit countries’ flexibility in interest rate policies, possibly leading to more accommodative monetary policies, which can lower real interest rates and increase gold’s relative attractiveness.

Decline in US dollar confidence

When the dollar weakens or market confidence in the dollar drops, gold priced in USD tends to benefit and attract capital inflows.

Geopolitical tensions

Ongoing conflicts like the Russia-Ukraine war and Middle East tensions continue to boost safe-haven demand for precious metals, causing short-term volatility.

Community effects

Continuous media coverage and social sentiment can lead to a flood of short-term capital into gold markets regardless of costs, further pushing prices higher.

Note: These factors may cause sharp fluctuations in the short term and do not necessarily indicate a long-term trend. For Taiwanese investors, fluctuations in USD/TWD exchange rates will also impact returns.

How do institutions view gold prices in 2025? Summary of expert forecasts

Despite recent volatility, mainstream institutions remain optimistic about long-term trends.

J.P. Morgan’s commodities team considers this correction a “healthy adjustment,” warning of short-term risks but more confident in the long-term outlook, raising the Q4 2026 target price to $5,055 per ounce.

Goldman Sachs remains optimistic about gold prospects, reaffirming a target price of $4,900 per ounce by the end of 2026.

Bank of America also holds a positive view. After raising its 2026 target to $5,000 per ounce, strategists recently stated that gold could even surge to $6,000 next year.

From the physical gold market perspective, well-known brands like Chow Tai Fook, Luk Fook Jewelry, Chao Hong Ji, and Chow Sang Sang still quote the reference price for 24K gold jewelry in Mainland China at above 1,100 RMB/gram, with no obvious decline yet.

Considering all these factors, gold as a “globally trusted” reserve asset remains fundamentally supported in the long term. However, short-term volatility risks must be carefully watched, especially around US economic data releases and meetings.

As an individual investor, is it suitable to buy gold now?

After understanding the logic behind this rally, you should have a preliminary judgment of the future trend. The gold market is not over yet; both medium-long-term and short-term opportunities still exist. But avoid blindly following the trend. Especially for novice investors, sharp fluctuations can easily lead to chasing highs and selling lows, which can be financially damaging over time.

Advice for different investors:

Short-term traders: Volatile markets provide good opportunities for short-term trading. Market liquidity is ample, and the direction of rise and fall is relatively easier to judge, especially during sharp surges or drops when bullish and bearish forces are clear. Experienced traders can easily ride the wave.

New traders aiming to catch volatility: Start with small amounts, and don’t blindly increase positions. Once the mindset collapses, losses can be severe. It’s recommended to learn how to use economic calendars to track US economic data to assist trading decisions.

Long-term holders: Be prepared for significant short-term fluctuations. Although the long-term outlook is bullish, you need to consider whether you can tolerate the intense swings in the middle.

Portfolio allocation: Gold can be included in your portfolio, but don’t put all your assets into it. Gold’s volatility is comparable to stocks, so diversification is more prudent. Some investors choose to hold long-term while also taking advantage of price swings for short-term trades, especially during periods of increased volatility around US market data releases. This requires experience and risk management skills.

Three important reminders:

Gold price volatility is not less than stocks. The average annual amplitude of gold is 19.4%, while the S&P 500’s average annual amplitude is only 14.7%.

Gold’s investment cycle is quite long. Over a 10-year horizon, gold can preserve value, but it may double or be halved within that period.

Physical gold trading costs are high, generally between 5% and 20%. Over-concentration is not recommended; avoid putting all your funds into a single asset.

In an era full of uncertainties, gold’s appeal is undoubtedly increasing. But the smartest approach is always to make rational decisions based on a clear understanding of the risks.