2025 Gold Price Trend Analysis: Opportunities for Gold Investment from Historical Highs

Gold prices have performed remarkably well over the past two years. Surpassing the $4,300 per ounce mark in October this year, gold has hit a new record high, with an annual increase approaching the highest levels in nearly 30 years. Compared to 31% in 2007 and 29% in 2010, this rally has already achieved very convincing results. Facing this market trend, investors generally have three major questions: Why does gold continue to stay strong? Can this upward cycle persist? Is it appropriate to enter the market at this stage? This article will answer these questions one by one through gold price comparisons, market data, and institutional forecasts.

Institutions Are Generally Optimistic, Gold Price Comparisons Show Upward Potential

Before analyzing future trends, let’s first look at the stance of professional institutions.

J.P. Morgan Commodity Team believes that recent pullbacks are a “healthy correction” and has raised its Q4 2026 target price to $5,055 per ounce.

Goldman Sachs maintains an optimistic outlook, reaffirming their expectation of $4,900 per ounce by the end of 2026.

Bank of America strategists are even more proactive. After raising their 2026 target price to $5,000, they recently stated that gold could even surge to $6,000 next year.

These forecasts are not baseless. Comparing current levels with historical gold prices, there is still considerable room for growth to reach the institutional target prices, reflecting a generally bullish outlook on gold’s medium- to long-term prospects. Well-known jewelry brands such as Chow Tai Fook, Luk Fook Jewelry, and Chow Sang Sang still quote domestic pure gold jewelry prices above 1,100 RMB/gram, further confirming market recognition of gold’s value.

Four Major Drivers Support Continuous Rise in Gold Prices

Understanding the logic behind gold prices is essential to accurately judge future movements. The main drivers of this rally include:

The risk aversion triggered by tariff policies

The series of tariff policies introduced during Trump’s administration became a key catalyst for gold’s rise in 2025. Continuous policy changes increased market uncertainty, boosting safe-haven demand and pushing up gold prices. Historical experience (such as the US-China trade war in 2018) shows that during periods of policy uncertainty, gold prices often experience short-term surges of 5-10%.

Expectations of interest rate cuts benefiting gold

A rate cut by the Federal Reserve directly weakens the US dollar’s attractiveness and reduces the opportunity cost of holding gold, thereby increasing its relative appeal. According to CME interest rate futures data, there is an 84.7% probability of a 25 basis point rate cut at the next December meeting.

It’s worth noting that gold prices show a clear negative correlation with real interest rates. When real interest rate = nominal interest rate – inflation rate declines, gold tends to perform strongly. After the September FOMC meeting, gold prices temporarily retreated because the market had already priced in the expected 25 basis point rate cut, and Powell characterized this as a “risk management rate cut” rather than a signal of ongoing rate cuts.

Central banks worldwide continue to increase their gold holdings

According to the World Gold Council (WGC), in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. In the first nine months, total gold purchases reached about 634 tons, slightly lower than the same period last year but still significantly higher than other periods.

More notably, the WGC’s 2025 central bank gold reserve survey shows that 76% of respondents believe the proportion of gold will be “moderately or significantly increased” over the next five years, and most central banks expect the “US dollar reserve ratio” to decline. This trend provides a solid long-term support for gold.

Economic and geopolitical risk factors

Global debt has reached $307 trillion (IMF data), and high debt levels limit countries’ room for interest rate policies. Monetary policy tends toward easing, which suppresses real interest rates and indirectly boosts gold’s attractiveness. Additionally, ongoing conflicts such as the Russia-Ukraine war, Middle East tensions, and shaken confidence in the US dollar all promote demand for gold as a safe-haven asset.

Media reports and social sentiment further fuel short-term capital inflows, creating a continuous surge. However, caution is advised: these factors may cause sharp volatility in the short term and do not necessarily indicate a sustained long-term trend.

Investment Advice: Entry Strategies Vary by Individual

Having understood the logic behind gold’s rise, the next step is to consider the investment approach suitable for oneself.

Short-term traders

If you have some trading experience, the current volatile market indeed offers many opportunities. Market liquidity is ample, and price movements are relatively predictable, especially during sharp surges or drops, where bullish and bearish forces are clear. For skilled traders, riding the trend can yield substantial profits.

New investors

If you are new to the market and want to seize recent volatility, it’s recommended to start with small amounts and avoid blindly increasing positions. A poor mindset can lead to rapid losses. Use economic calendars to track US economic data releases, which can effectively assist trading decisions.

Long-term allocators

If you plan to purchase physical gold as a long-term store of value, be prepared to endure significant fluctuations. Although the medium- to long-term outlook is bullish, short-term volatility can be intense. Also, physical gold transactions typically involve higher costs (usually 5%-20%), so over-concentration is not advisable.

Balanced strategy

Allocating gold within a diversified portfolio is feasible, but note that gold’s volatility (average annual amplitude of 19.4%) is not lower than stocks (S&P 500 average amplitude of 14.7%). Putting all your assets into gold is not the best approach. Diversification remains the more prudent choice.

To maximize returns, you can hold a long-term position and take advantage of price fluctuations for short-term trading, especially around US market data releases, where volatility is most pronounced. However, this requires considerable experience and risk management skills.

Summary: Rational View of Gold Investment

Gold has a very long cycle. Buying gold as a hedge can generate appreciation over a 10+ year horizon, but within that period, it could double or be halved. Gold price volatility is comparable to stocks, with an average annual amplitude of 19.4%, and sharp fluctuations are normal in the short term.

There is no absolute timing for entry; key factors include understanding your risk tolerance, market cycles, and sticking to your investment strategy. Regardless of the approach, avoid blindly following the crowd or concentrating all your funds in a single asset—this is never the smartest choice.

The current gold rally is not over. Both medium- and long-term opportunities remain. The most important thing is to make cautious decisions based on a thorough understanding of market logic, aligning with your own conditions, and finding your investment rhythm through gold price comparisons and risk assessments.