2025 International Gold Index Outlook: Is there still room for gold prices to rise?

Why Is Gold Continually Rising? An Overview of Market Drivers

Entering 2025, global market uncertainties have boosted the appeal of gold. Data shows that the recent two-year increase in gold prices has approached the highest levels in 30 years, surpassing 31% in 2007 and 29% in 2010. Especially after breaking through the $4,300 mark in October, market enthusiasm remains strong.

There are three core factors driving the continuous rise in gold prices:

First, market uncertainty caused by trade policies

A new round of trade policies has heightened risk aversion in the market, similar to the experience during the US-China trade war in 2018—gold prices typically see a short-term surge of 5 to 10% during periods of policy uncertainty. Continuous policy adjustments have led investors to seek safe-haven assets, benefiting gold.

Second, expectations regarding Federal Reserve interest rate policies

This is the most direct factor influencing gold prices. When the Fed cuts interest rates, the US dollar tends to weaken, and the cost of holding gold denominated in dollars decreases, making gold more attractive. 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.

The key point is—gold prices have a clear negative correlation with real interest rates. Real interest rate equals nominal interest rate minus inflation rate, so the Fed’s rate cut decisions significantly impact gold price trends. Historical data shows that gold fluctuations almost closely follow changes in Fed rate cut expectations.

Third, continuous accumulation of gold reserves by global central banks

According to the World Gold Council(WGC), in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months of 2025, central banks bought approximately 634 tons of gold, remaining far above other periods.

In the council’s survey report, 76% of responding central banks believe their gold holdings will moderately or significantly increase over the next five years, while most expect the proportion of US dollar reserves to decline. This reflects rising confidence worldwide in gold as a reserve asset.

Other Factors Driving Gold Price Upward

Besides the three main drivers, the following factors also support the trend of the international gold index:

Global high debt environment and economic uncertainty

By 2025, global debt totals $307 trillion. High debt levels limit countries’ flexibility in interest rate policies, leading to more accommodative monetary policies, which lower real interest rates and indirectly boost gold attractiveness.

Declining confidence in the US dollar

When market confidence in the dollar wanes, gold priced in USD benefits, attracting more capital inflows. The inverse relationship between the dollar’s trend and gold prices is clearly visible here.

Persistent geopolitical risks

Ongoing conflicts such as the Russia-Ukraine war and Middle East tensions increase safe-haven demand for precious metals, often causing short-term volatility and capital inflows.

Media and market sentiment

Continuous news coverage and social media buzz can lead to short-term capital inflows into gold markets, further pushing prices higher. However, it’s important to note that such factors-driven short-term volatility does not necessarily indicate a long-term trend.

Major International Institutions’ Gold Price Outlook

Despite recent adjustments and fluctuations, many top global financial institutions remain optimistic about long-term prospects:

J.P. Morgan’s commodities team considers this correction a “healthy adjustment,” raising their Q4 2026 target price to $5,055 per ounce, with a long-term positive outlook unchanged.

Goldman Sachs reiterates a target of $4,900 per ounce by the end of 2026.

Bank of America is more aggressive, raising their 2026 target to $5,000 per ounce, with strategists even suggesting gold could hit $6,000 next year.

Additionally, well-known international jewelry retailers’ reference prices for pure gold still stay above 1,100 TWD/gram, with no significant decline, confirming market confidence in gold’s long-term value.

Three Key Considerations for Investing in Gold Now

After understanding the logic behind gold price increases, the key question is whether to enter now. The answer depends on your investment style and risk tolerance:

For short-term traders

If you have substantial trading experience, volatile markets can offer excellent opportunities. Liquidity is ample, and price directions are relatively easier to judge, especially during sharp surges or drops. However, beginners should start with small amounts and avoid reckless leverage, as gold’s average annual volatility is 19.4%, higher than the S&P 500’s 14.7%, indicating significant fluctuation risk.

Use economic calendars to track US economic data releases, especially around US market hours, as volatility tends to spike during these times.

For long-term holders

If you plan to buy physical gold as part of your asset allocation, be prepared to endure significant short-term fluctuations. While gold has historically preserved value over 10+ years, it can also experience doubling or halving risks within that period.

Note that physical gold has higher transaction costs, generally between 5% and 20%, which can eat into returns.

For portfolio allocators

Including gold in your portfolio is feasible, but you should not allocate all your funds to it. Gold’s volatility is not lower than stocks; diversification remains the more prudent strategy.

For maximum return seekers

Consider holding long-term while trading short-term based on price fluctuations, especially around key economic data releases. This requires trading experience and strong risk management skills.

Important Reminders Before Investing

Before deciding to invest in international gold indices, keep the following points in mind:

• Gold’s volatility is comparable to stocks, with an average annual amplitude of 19.4%; mental preparedness is essential.
• Gold cycles are long; long-term bullish but with significant intermediate fluctuations.
• Physical gold has high costs; diversified investment is more stable.
• For Taiwanese investors, gold is also affected by USD/TWD exchange rate fluctuations.

Overall, the gold market in 2025 still holds upward potential, but specific strategies should be tailored to individual circumstances. It’s not too late to enter; the key is to find a suitable way to participate and avoid blindly following the crowd.