The gold rally is not over; will the price per ounce in 2025 have more potential?

Over the past year, gold has been on an unstoppable rise. After reaching a historic high of $4,400 per ounce in October, there was some pullback, but market enthusiasm remains strong. Investors are generally asking the same question: Can the price of gold per ounce continue to rise?

To judge the direction of gold prices, one must first understand the underlying driving logic. This surge is not without cause but results from multiple factors working together.

Why Are Gold Prices Soaring? Three Core Drivers

Policy Uncertainty Sparks Safe-Haven Demand

At the start of 2025, a series of tariff policies triggered market volatility, greatly increasing uncertainty. Whenever policy risks rise, markets flock to safe-haven assets like gold. Historical data shows that during similar policy risk periods (such as the US-China trade war in 2018), gold prices typically increase short-term by 5–10%.

Federal Reserve Rate Cut Expectations Change Gold’s Attractiveness

This is the most critical factor. Rate cuts tend to weaken the dollar, reducing the opportunity cost of holding gold. According to CME interest rate futures data, there is an 84.7% chance that the Fed will cut interest rates by 25 basis points at the December meeting. Market expectations of the pace of rate cuts directly influence gold price trends.

More importantly, gold prices have a clear negative correlation with real interest rates: the lower the rates, the more attractive gold becomes. When nominal rates decline, real interest rates (adjusted for inflation) weaken, which explains why gold prices always follow Fed policy decisions closely.

Global Central Banks Continue to Increase Gold Reserves

According to the World Gold Council, in Q3 2025, global net gold purchases by central banks reached 220 tons, a 28% increase from the previous quarter. In the first nine months, central banks accumulated about 634 tons of gold. Notably, 76% of surveyed central banks expect to “moderately or significantly increase” their gold holdings over the next five years, while most expect the dollar reserve ratio to decline.

This reflects a rising emphasis among countries on gold as a reserve asset.

Other Factors Driving the Surge

Global High Debt Environment

As of 2025, global debt totals a staggering $307 trillion. High debt levels limit countries’ flexibility in interest rate policies, leading to continued accommodative monetary policy, which keeps real interest rates low and indirectly boosts gold’s allocation appeal.

Geopolitical Risks Persist

The ongoing Russia-Ukraine conflict and instability in the Middle East continue to elevate geopolitical risks, directly increasing investors’ demand for precious metals as safe-haven tools.

Community Sentiment Fuels Short-Term Capital Inflows

Continuous media coverage and social discussions can trigger short-term herd behavior, leading to rapid short-term increases in gold prices.

It’s important to note that short-term factors can cause sharp volatility, but this does not necessarily indicate a long-term trend. For Taiwanese investors, USD/TWD exchange rate fluctuations also impact realized returns.

Institutional Gold Price Forecasts

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

J.P. Morgan’s commodities team considers this correction a “healthy adjustment,” remains bullish long-term, and has raised its Q4 2026 target price to $5,055 per ounce.

Goldman Sachs reaffirms its end-2026 target of $4,900 per ounce, maintaining a steady stance.

Bank of America strategists are more aggressive, previously raising their 2026 target to $5,000, and recently suggesting gold could surge to $6,000 next year.

From the jewelry industry perspective, chain brands like Chow Tai Fook, Luk Fook, and Chao Hong Ji continue to quote stable prices for 24K gold jewelry in Mainland China at over 1,100 RMB/gram, with no significant decline.

The logic behind these forecasts is clear: as a globally recognized trust reserve asset, the fundamental support factors for gold in the medium to long term remain unchanged.

What Should Retail Investors Do Now?

After understanding the logic behind gold price increases, many ask: Is it still a good time to enter?

The answer is yes, but it depends on individual circumstances. The current gold rally is not over; opportunities exist for both medium-long-term and short-term trading, but it’s crucial to avoid blindly following the trend.

For short-term traders:

If you have experience, there are plenty of opportunities in volatile markets. Liquidity is ample, and short-term price directions are relatively easier to judge. Especially during sharp surges or drops, the momentum between bulls and bears is clear. But beginners should not rush in; start with small capital to test the waters, and learn to use economic calendars to track US economic data, which can greatly aid trading decisions.

For long-term holders:

If you plan to buy physical gold for appreciation, be prepared to endure significant fluctuations. Although the long-term outlook is bullish, you need to be able to tolerate intense volatility along the way.

For asset allocators:

Including gold in your portfolio is feasible, but remember that gold’s volatility is higher than stocks, with an average annual amplitude of 19.4% (compared to 14.7% for the S&P 500). Don’t allocate all your assets into gold; diversification is safer.

Advanced strategies:

If you want to maximize returns, you can hold long-term while trading short-term opportunities, especially around US economic data releases, where volatility often amplifies. This requires substantial experience and risk management skills.

A few important reminders:

Gold cycles are very long. As a store of value, it requires a time horizon of at least 10 years to fully realize its value. During this period, prices could double or be cut in half. Physical gold trading costs are relatively high, typically 5%–20%, which eats into returns. Most importantly, don’t put all your eggs in one basket.

In summary, gold is indeed worth paying attention to, but before investing, assess your risk tolerance and time horizon carefully. Blindly chasing highs is a common reason for retail losses.