Is it good to buy gold for savings? Analyzing the continuously rising gold market

Since 2024-2025, the gold market has shown continuous upward signals amid global financial market volatility. For many investors wondering whether buying gold for storage is a good idea, we will analyze based on actual data and signals indicating future market directions.

Why gold prices keep rising: 4 main factors

Gold prices reached an all-time high of $2,790 per ounce in late 2024. This phenomenon didn’t happen by chance but resulted from the convergence of several key factors.

First, geopolitical tensions remain intense. The prolonged conflict between Russia and Ukraine, along with risks in the Middle East, have driven investors to seek safer assets. Gold has become a preferred safe haven. Second, political changes in major countries have created uncertainty about economic policies. This has gradually pushed investors to increase their gold holdings in their portfolios.

Third, concerns over long-term inflation and the U.S. budget deficit continue to support gold prices, as gold is seen as a hedge against currency devaluation. Fourth, liquidity management policies leading to low interest rates have reduced the opportunity cost of holding gold. When returns from deposits or bonds decline, gold becomes more attractive to investors.

Central banks worldwide drive gold demand

One of the factors that professional investors closely monitor is the changing behavior of central banks globally aiming to reduce reliance on the US dollar. In 2024, China increased its gold holdings from about 1,900 tons to over 2,500 tons. This strategic purchase reflects efforts to balance financial stability and reduce risks from currency fluctuations.

Meanwhile, India plans to raise its gold reserve ratio from 7% to 10%. In the first quarter of 2024 alone, central banks accumulated a net total of 290 tons of gold, 36% above the quarterly average. These figures indicate that the trend of central government gold purchases remains strong and is a significant driver influencing market prices.

Interest rate policies and their impact on gold prices

Recently, the U.S. Federal Reserve (Fed) has cut interest rates after maintaining high levels to combat inflation. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive compared to low-yield assets. This shift has increased gold’s appeal.

Additionally, lower interest rates tend to weaken the dollar. As the dollar depreciates, gold priced in dollars becomes more appealing to foreign buyers. This chain reaction is a key reason why, despite complex economic conditions, lower interest rates continue to support higher gold prices.

Technical analysis: signals indicating further price adjustments

From technical data, key support for gold is at $2,447 per ounce, aligning with the 200-day moving average. This level is a critical baseline; when prices approach it, a reversal often occurs. Another resistance level is at $2,800 per ounce.

A notable technical signal is the RSI (Relative Strength Index), which shows the market has moved from overbought conditions, indicating room for further upward correction as the market has returned to normal trading levels.

The MACD indicator also shows positive behavior, approaching the Zero Line. If it can stay above this line, it confirms a medium-term bullish trend. Increased trading volume during price rises further signals investor confidence in the upward momentum.

How leading financial institutions are forecasting

Most major global financial institutions have a positive outlook on gold prices in the medium to long term, though their views have been adjusted based on changing market conditions.

Goldman Sachs has revised upward its gold price forecast, citing strong demand from central banks worldwide and ongoing geopolitical risks as supporting factors.

J.P. Morgan remains cautiously optimistic, citing expectations that Fed rate cuts and strong central bank demand will continue to support prices.

Morgan Stanley predicts gold could reach $2,800 per ounce, while UBS warns that the recent rapid rise may lead to short-term corrections. FX Empire, with an optimistic outlook, suggests that if geopolitical conflicts escalate, gold could test $3,000 per ounce.

Overall, despite differing details, all institutions agree that gold prices are likely to continue rising, with target levels generally between $2,600 and $3,000 per ounce.

Is buying gold for profit a good strategy?

Deciding whether buying gold for storage is a good idea depends on your investment goals and risk management capacity. The right investment strategy is crucial.

Choose an appropriate holding period

For long-term investments (3-5 years or more), gold is an effective diversification asset, moving inversely to riskier assets like stocks. For short-term investments (6 months to 1 year), caution is advised due to price volatility, and clear entry and exit plans are necessary.

Allocate investment proportionally

Most experts recommend allocating about 5-10% of your total portfolio to gold. For example, if you have 1 million baht, investing 50,000–100,000 baht in gold is advisable. Avoid exceeding 15-20% of your portfolio to maintain balance and diversification.

Identify reasonable entry points

Technical analysis shows strong support at $2,447 per ounce. Buying when prices dip near this level could be advantageous. If prices fall below $2,500, it may be an opportunity to add positions.

Use dollar-cost averaging to reduce risk

Instead of investing all at once, divide your investment into 4-6 parts and buy gradually as prices decline. This method, known as dollar-cost averaging, helps mitigate the risk of buying at a high point.

Prepare for volatility

Although gold is a safe asset, it still carries price fluctuation risks, especially in the short term. Historically, gold can drop 10-15% during volatile periods, and in worst-case scenarios, down 20-25%. If you invest 100,000 baht, be prepared for potential short-term declines to 85,000–90,000 baht, or even 75,000–80,000 baht in severe crises.

Summary: Buying gold for risk protection

So, is buying gold for storage a good idea? It depends on your investment objectives. In a volatile and uncertain global financial environment, investing in gold is a reasonable way to diversify your portfolio.

However, caution is essential. The most important thing is to honestly assess your acceptable risk level and avoid investing money needed for short-term expenses. Gold should be part of a long-term investment strategy, complemented by other asset classes to ensure proper diversification.

Ultimately, buying gold is beneficial if you understand your investment purpose, can evaluate your risk tolerance, and follow your plan with discipline.