How to view gold investment? Complete analysis of the 2025 gold market outlook and risks

Between 2024 and 2025, the global economy remains volatile, and gold has once again become a market focus. After reaching a historic high of $4,400 per ounce at the end of October, despite a technical correction, market participation has not diminished. Many investors face the same questions: Is it too late to enter now? Can the gold trend continue? How should I position myself?

What is the core driver of the gold trend?

Policy variables trigger increased risk aversion

The primary driver behind the recent continuous rise in gold prices is policy uncertainty. A series of protectionist policies announced at the beginning of the new year have heightened concerns about economic prospects, clearly boosting risk aversion sentiment. Based on historical experience (such as during the 2018 trade conflict), gold prices often experience a short-term increase of 5–10% during periods of policy uncertainty. This pattern is also playing out in the current market.

The inverse relationship between interest rate expectations and gold trends

The Federal Reserve’s monetary policy stance has a profound impact on gold prices. The lower the real interest rates, the more attractive gold becomes as an investment—this is a key logic behind gold price fluctuations. When central banks cut interest rates, the risk of dollar depreciation increases, making dollar-denominated gold relatively more attractive.

According to CME interest rate tools data, the probability of a 25 basis point rate cut by the Federal Reserve in December is as high as 84.7%. Monitoring such data can help investors forecast gold price movements. However, it’s important to note that markets have already priced in some rate cut expectations, so policy announcements often lead to short-term volatility.

Continued central bank gold purchases worldwide

According to the World Gold Council, net gold purchases by central banks reached 220 tons in Q3 2025, a 28% increase quarter-over-quarter. In the first nine months, total gold purchases amounted to approximately 634 tons, slightly lower than the same period last year but still significantly higher than other years. Notably, 76% of surveyed central banks indicated they plan to increase their gold holdings over the next five years, while also expecting the share of US dollar reserves to decline. This reflects a reassessment of the international financial system’s reliance on the US dollar as a reserve currency.

Macroeconomic and geopolitical factors fueling the trend

Global debt has risen to $307 trillion, and debt pressures in various countries have led to accommodative monetary policies, further lowering real interest rates. Additionally, ongoing conflicts such as the Russia-Ukraine war, tensions in the Middle East, and other geopolitical risks have strengthened gold’s appeal as a safe-haven asset.

It’s also worth noting that widespread media coverage on social media and traditional outlets has driven short-term capital inflows, creating a self-reinforcing “chasing the rally” effect.

Institutional outlook: optimistic signals for gold

Despite recent technical corrections, major international financial institutions remain optimistic about gold’s prospects:

• J.P. Morgan Commodity Team: Views this correction as a “healthy adjustment” and has raised its Q4 2026 target price to $5,055 per ounce.
• Goldman Sachs: Maintains a target price of $4,900 by the end of 2026.
• Bank of America: Takes a more aggressive stance, believing gold could surge to $6,000 next year.

These forecasts are based on the unchanged long-term support factors—global trust in gold, central bank accumulation trends, monetary policy tendencies, etc.—all supporting higher gold prices.

Participation strategies for different investors

After understanding the gold trend, investment decisions should vary based on individual circumstances:

Short-term traders: Opportunities exist in volatile environments. Market liquidity is ample, especially around US economic data releases, with price swings becoming more pronounced. Beginners should start with small capital to test the waters, avoiding blind increases that could lead to significant losses.

Long-term preservers: Physical gold is suitable as part of an asset allocation, but be prepared for potentially sharp fluctuations. Gold’s annual average volatility is 19.4%, comparable to stocks, and it can double in value or halve during volatile periods. Also, pay attention to USD/TWD exchange rate fluctuations, which can impact converted returns.

Balanced allocators: It’s advisable to include gold in a diversified portfolio rather than concentrating heavily. Consider a “long-term hold + short-term trading” approach—taking advantage of price volatility during active trading periods (around US market data releases). However, this requires sufficient risk management experience.

Three reminders for investing in gold

1. Volatility is significant: Gold’s annual volatility is 19.4%, similar to stocks, and can be even more intense at times.
2. Time horizon should be long: As a store of value, gold requires a holding period of 10 years or more to fully realize its potential.
3. Transaction costs matter: Physical gold trading costs range from 5% to 20%. Investment scale and costs should be aligned.

In summary, the fundamentals supporting gold’s trend remain solid, with a clear bullish logic in the medium to long term. For retail investors, the key is to choose participation methods based on their risk tolerance and investment horizon—avoid blindly following the crowd. Whether engaging in short-term arbitrage or long-term preservation, rational planning always outweighs emotional trading.