2025 Gold Investment Outlook: Is There Still Room for Gold Prices to Rise?

The current global economic situation remains unstable, and the gold market has once again become a focus of investor attention. Since surpassing the historic high of $4,400 per ounce in October last year, gold has experienced some pullback, but market enthusiasm remains strong. Investors are generally contemplating three core questions: Why is gold price continuing to rise? What is the gold price trend in 2025? Is it too late to enter now?

Gold XAU/USD reaches new highs in recent years

Gold has continued its upward climb over the past two years, breaking through the $4,300 mark in 2024 to set new records. According to Reuters data, the gold price increase between 2024-2025 is approaching the highest levels in nearly 30 years, surpassing the 31% surge in 2007 and the 29% in 2010. Compared to the gains in 2023, this wave of gold price movement is even more robust.

Behind this rally, there are three major core supporting factors.

Three main factors supporting the continued rise in gold prices

Policy uncertainty driving safe-haven demand

The tariff policies introduced by the new government after taking office have directly triggered the upward trend in gold prices in 2025. A series of tariff measures have increased market uncertainty, significantly boosting risk aversion sentiment, which in turn has driven up gold prices. Historical experience (such as the US-China trade friction in 2018) shows that during periods of policy uncertainty, gold prices typically experience short-term increases of 5-10%.

Expectations of Fed rate cuts continue to ferment

A rate cut by the Federal Reserve would lead to a weaker dollar, reducing the opportunity cost of holding gold, thereby increasing its attractiveness. If the economy weakens, the magnitude of rate cuts could further expand.

It is noteworthy that after the September FOMC meeting, gold prices actually declined, because the 25 basis point rate cut was fully in line with expectations, and the market had already priced it in. Powell characterized it as a “risk management rate cut,” without implying ongoing rate cuts in the future, leading to market caution about subsequent policies.

Historical observations indicate that gold prices are inversely related to real interest rates: lower interest rates lead to higher gold prices. Since real interest rate = nominal interest rate - inflation rate, the Fed’s rate cut policies have a profound impact. According to CME interest rate tools data, the probability of the Fed cutting rates by 25 bps at the December meeting is 84.7%.

Global central banks continue to increase gold reserves

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 lower than the same period last year but still significantly higher than other periods.

In the survey conducted by the association, 76% of respondent central banks believe that the proportion of gold will be “moderately or significantly increased” over the next five years, while most expect the dollar reserve ratio to decline. This reflects a major shift in international reserve asset allocation.

Other important factors driving gold prices

Heavy global debt burden and inflationary pressures

By 2025, global debt totals $307 trillion. High debt levels mean limited room for interest rate policies, and monetary policy may lean more towards easing, indirectly lowering real interest rates and boosting gold demand.

Challenges to the US dollar reserve status

When the dollar weakens or market confidence in the dollar declines, gold priced in dollars benefits, attracting more capital inflows.

Rising geopolitical uncertainties

Ongoing conflicts in Ukraine and Russia, tense Middle East situations, and other factors increase the safe-haven value of precious metals, often causing short-term volatility.

Market sentiment fueling the rally

Continuous media reports and social media sentiment amplification lead to large short-term capital inflows into gold markets, intensifying the upward momentum.

It is important to note that these factors may cause intense volatility in the short term. For Taiwanese investors, currency-denominated gold also involves USD/TWD exchange rate risks, which could affect actual returns.

Institutional forecasts for gold’s future trend

Despite recent fluctuations, most mainstream institutions remain optimistic about its long-term outlook.

J.P. Morgan commodities team considers this correction a “healthy adjustment.” After warning of short-term risks, the team is more optimistic about the long-term prospects, raising its Q4 2026 target price to $5,055 per ounce.

Goldman Sachs remains bullish on gold, maintaining its previous target of $4,900 per ounce by the end of 2026.

Bank of America also maintains a positive outlook on precious metals. Previously raising its 2026 gold target to $5,000, strategists recently stated that gold could even challenge the $6,000 level next year.

Major jewelry retailers such as Chow Tai Fook, Luk Fook Jewelry, and Chao Hong Ji still quote pure gold jewelry at over 1100 TWD/gram, with no significant decline, reflecting market confidence in gold prices.

Should retail investors buy gold now?

Understanding the logic behind this gold price rally suggests that the current gold market has not yet ended. Whether planning for medium-long-term or short-term, there are still opportunities. However, investors should exercise caution and avoid blindly following the trend. Especially for beginners, volatile markets often lead to chasing highs and selling lows, resulting in repeated losses.

Advice tailored for different investors:

If you are an experienced short-term trader, the volatility provides excellent trading opportunities. Market liquidity is ample, and short-term price directions are relatively easier to judge, especially during sharp rises or falls, where bullish or bearish momentum is clear. Skilled investors can seize these opportunities.

If you are a new trader trying short-term trading, remember: start with small amounts to test the waters, and avoid over-leveraging. A collapsing mindset can lead to losses. Using economic calendars to track US economic data in real-time can help inform trading decisions.

If you want to allocate physical gold as a long-term holding, be prepared to tolerate significant fluctuations. Although the long-term trend is upward, enduring the intense volatility is a key consideration.

If you plan to include gold in your investment portfolio, it is feasible, but note that gold’s volatility is comparable to stocks, so avoid concentrating all funds solely in gold. Diversification remains the prudent approach.

If you aim to maximize returns, you can hold long-term while capitalizing on price fluctuations for short-term trades, especially around major US market data releases, where volatility often expands. This requires experience and risk management skills.

Key points investors must remember:

Gold price volatility is comparable to stocks. The average annual amplitude of gold is 19.4%, while the S&P 500’s is 14.7%.

Gold investment cycles are very long. Holding over 10 years can preserve and grow value, but during this period, prices may double or be cut in half.

Physical gold trading costs are relatively high, typically between 5% and 20%.

Over-concentration is not recommended. Diversification is fundamental to risk reduction.

As a globally trusted reserve asset, gold’s medium- and long-term support factors remain intact. However, in practice, short-term risks should be carefully monitored, especially around US economic data releases and key meetings. The gold price trend in 2025 is expected to continue upward, but investors should plan strategies rationally based on their risk tolerance and investment horizon.