Gold prices fluctuate in 2025: Will gold still fall?

Since entering the fourth quarter of 2024, the international gold market has experienced a wave of intense price volatility. After reaching a historic high of $4,400 per ounce, there was an obvious pullback, and investors are facing a core question: Will gold still fall? Has this rally peaked?

Why Is Gold Fluctuating at High Levels?

In recent years, gold has shown strong momentum, with gains approaching the highest levels in nearly 30 years, surpassing 31% in 2007 and 29% in 2010. However, after breaking above $4,300 in October, the subsequent decline has led to differing opinions in the market about the future trend.

Three main drivers support the rise in gold prices:

The first factor is policy uncertainty. Currently, the global trade landscape is undergoing significant changes, with frequent adjustments to tariffs creating market uncertainty that directly boosts the appeal of safe-haven assets. Historically, similar policy shocks (such as the US-China trade war in 2018) have often triggered short-term gold price increases of 5-10% during periods of uncertainty.

The second factor stems from expectations of Federal Reserve monetary policy. An environment of rate cuts will directly weaken the US dollar, reduce the opportunity cost of holding gold, and thus enhance gold’s relative attractiveness. According to CME interest rate tools, the probability of the Fed cutting rates by 25 basis points at the December meeting is 84.7%. Gold prices show a clear negative correlation with real interest rates—when rates fall, gold rises.

The third factor is the continued accumulation by global central banks. According to the World Gold Council report, in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months, central banks accumulated approximately 634 tons of gold, still significantly higher than the same period in previous years. Additionally, 76% of surveyed central banks expect to increase their gold reserves over the next five years while reducing dollar holdings.

Why Is Gold Correcting? Where Are the Downside Risks?

Despite numerous supporting factors, will gold still fall? The answer is not simply yes or no.

When market expectations for rate cuts have already been priced in, actual rate cuts often fail to exceed expectations, leading to downward pressure on gold prices. The Fed has characterized rate cuts as “risk management cuts” rather than a sustained easing, and this shift in policy signals can trigger corrections in gold.

Downside risks to watch include:

If US economic data outperform expectations and inflation pressures re-emerge, the Fed may slow or pause rate cuts, which would put direct pressure on gold. The total global debt has reached $307 trillion, and policy flexibility for governments is limited. If economic signals improve, gold could face larger corrections.

Easing geopolitical risks may also weaken safe-haven demand. If international tensions improve, the need for gold as a store of value diminishes. Additionally, a cooling of media and social media hype could lead to rapid withdrawal of speculative funds.

Why Do Institutions Still Have a Long-Term Optimism?

Despite the risks mentioned above, major investment banks have not changed their optimistic outlook. JPMorgan considers the current correction a “healthy adjustment” and has raised its Q4 2026 target price to $5,055 per ounce. Goldman Sachs maintains a target of $4,900 by the end of 2026, and Bank of America even forecasts gold could challenge $6,000 next year.

These forecasts are based on a consensus: as a globally trusted reserve asset, the fundamental support factors for gold in the medium to long term remain unchanged. Structural factors such as high debt levels, declining confidence in the dollar, and central bank accumulation continue to play a role.

How Should Retail Investors Respond to Gold Price Fluctuations?

For short-term traders: Gold’s annual volatility averages 19.4%, higher than the S&P 500’s 14.7%, providing opportunities for short-term trading. However, beginners should start with small capital, avoid blindly chasing highs or adding positions, especially as US economic data releases often amplify volatility.

For long-term allocators: While gold remains bullish in the long run, investors should be prepared for significant fluctuations. Physical gold has transaction costs between 5%-20%, which are relatively high. It’s advisable not to allocate all funds into a single asset but to include gold as part of a diversified portfolio.

For investors seeking maximum returns: Consider leveraging short-term price movements on top of long-term holdings, especially during US trading hours. This approach requires substantial market experience and risk management skills.

Overall, will gold still fall? In the short term, it may, but in the long term, support remains. The key is to understand your investment horizon and risk tolerance, develop a trading strategy suited to your situation, and avoid blindly following the crowd. Gold’s cycle is long; it could double in ten years or be halved. Investment decisions should be based on rational analysis rather than emotional reactions.