2025 Gold Price Forecast: Market Reaction and Price Outlook

Gold once again becomes the focus of global investors. After approaching a historic high of over $4,400 per ounce in October, gold prices have pulled back, but market enthusiasm remains strong. Many investors want to know: does this upward trend still have room to continue? To answer this question, it is essential to understand the logic behind gold price fluctuations.

The Three Core Supports for the Strong Upward Movement of Gold

Over the past two years, gold has continued to rise, breaking through $4,300 in 2024 to reach new highs. According to Reuters data, the gold price increase in 2024-2025 is close to the highest in 30 years, surpassing 31% in 2007 and 29% in 2010. This strong upward momentum is not without traces; it stems from support at three levels:

Policy Uncertainty Boosts Safe-Haven Demand

Since Trump took office, a series of tariff policies have been introduced intensively, directly triggering increased market risk aversion. Historical experience (such as during the US-China trade war in 2018) shows that gold prices often experience a short-term rise of 5-10% during periods of policy uncertainty. Currently, market expectations suggest more variables in US economic policy, naturally attracting safe-haven capital to gold.

Interplay Between the US Dollar Trend and Interest Rate Outlook

Expectations of Fed rate cuts directly influence gold prices. Falling interest rates weaken the US dollar, reducing the opportunity cost of holding gold, thereby increasing its attractiveness. Historical data shows a clear negative correlation between gold prices and real interest rates: when rates decline, gold rises. According to CME interest rate futures data, there is an 84.7% probability that the Fed will cut rates by 25 basis points at the December meeting, which is a significant support factor for gold prices.

Continued Increase in Gold Reserves by Global Central Banks

The World Gold Council (WGC) reports that in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. In the first nine months, central banks accumulated about 634 tons of gold, slightly less than the same period last year but still significantly higher than other periods. Notably, 76% of surveyed central banks expect to increase their gold reserves over the next five years, while most also anticipate a decline in US dollar reserves. This shift reflects a deep adjustment in international reserve asset allocation.

Other Factors Driving Gold Price Upward

Global debt levels continue to rise. By 2025, total global debt will reach $307 trillion (IMF data). High debt environments limit countries’ room for interest rate policies, with monetary policy tending toward easing, which lowers real interest rates and indirectly boosts gold attractiveness.

Confidence in the US dollar is also wavering, promoting gold inflows. When the dollar faces pressure or market confidence declines, gold priced in USD benefits, attracting more capital allocation.

Geopolitical risks cannot be ignored. The ongoing Russia-Ukraine war, conflicts in the Middle East, and other events increase demand for safe assets. As a traditional safe-haven tool, gold’s short-term volatility can be amplified.

Media and social media effects also drive short-term capital inflows. Continuous news reports and social discussion sentiments create a frenzy, with large amounts of short-term funds rushing into the gold market, further strengthening upward momentum.

It is important to note that these factors may cause intense volatility in the short term, but do not necessarily indicate a long-term trend. For Taiwanese investors, fluctuations in USD/TWD exchange rates will also impact actual returns.

Market Expectations Revealed by Institutional Forecasts

Despite recent corrections, mainstream institutions remain optimistic about gold’s long-term prospects.

JPMorgan’s commodities team considers this correction a “healthy adjustment,” raising their Q4 2026 target price to $5,055 per ounce. Goldman Sachs reaffirms a target of $4,900 by the end of 2026. Bank of America is more aggressive, raising the 2026 target to $5,000 and suggesting gold could even hit $6,000 next year. International jewelry brands’ reference prices for pure gold still stay above RMB 1,100 per gram, with no significant retreat.

These forecasts reflect institutional confidence in the long-term support factors for gold but also serve as a reminder for investors to remain cautious of short-term volatility, especially around major economic data releases and Federal Reserve meetings.

Investment Participation Recommendations for Different Investors

For traders with short-term experience, the current volatile environment offers many trading opportunities. The liquidity of the gold market makes it relatively easier to judge short-term directions, especially during sharp fluctuations.

New investors interested in short-term opportunities should start with small capital to test the waters, avoiding reckless increases. A fragile mindset is a major enemy of profits. Tracking US economic data through economic calendars can help you make more rational trading decisions.

For those buying physical gold as a long-term holding, mental preparation is essential. Although the long-term bullish logic remains unchanged, intermediate fluctuations can be large; whether you can withstand them is the primary consideration.

Including gold in an investment portfolio is certainly feasible, but note that its volatility is not lower than stocks. Diversification is more stable than concentrated bets.

Investors seeking maximum returns might try a long-term holding combined with short-term trading strategies, especially around US market data releases, to capitalize on volatility. However, this requires certain experience and risk management capabilities.

Important Risk Warnings for Investors

Gold’s volatility is not less than stocks, with an average annual amplitude of 19.4%, higher than the S&P 500’s 14.7%. Holding gold typically involves a long cycle; over a 10-year horizon, the goal is to preserve and increase value, but prices can double or halve within that period. Physical gold trading costs are relatively high, generally between 5%-20%. It is not recommended to invest too much capital; diversification principles should be followed to avoid over-concentration.

While current forecasts from institutions are generally optimistic about gold’s trend, actual trading strategies should be flexibly adjusted based on individual risk tolerance and investment horizon.