Why has gold been rising continuously? Will the gold price in 2025 break through the $6,000 mark?

Why Has Gold Been Rising Continuously? This question has been troubling many investors. In October 2024, international spot gold (XAU/USD) surged to a historic high of $4,400 per ounce. Although there was a pullback afterward, the upward momentum has not truly faded. According to media reports, the gold price increase in 2024-2025 has approached the highest in nearly 30 years, surpassing 31% in 2007 and 29% in 2010.

Three Major Drivers Behind the Continuous Rise of Gold

1. Policy Uncertainty Driving Safe-Haven Demand

After the new government took office, a series of tariff policies emerged, increasing market concerns about economic prospects. Historical experience (such as the 2018 US-China trade war) shows that during periods of policy uncertainty, gold typically experiences a short-term increase of 5-10%. When markets become anxious, investors naturally shift funds into gold, regarded as a “safe haven.”

2. Federal Reserve Rate Cut Expectations Support Gold Prices

The Federal Reserve’s monetary policy is closely related to gold prices. Falling interest rates weaken the US dollar’s attractiveness, reducing the opportunity cost of holding gold, thereby boosting its investment appeal. According to CME interest rate tools, the probability of a 25 basis point rate cut by the Fed in December is as high as 84.7%. Historical data shows a clear negative correlation between gold prices and real interest rates—the lower the rates, the easier gold prices tend to rise.

3. Continued Central Bank Gold Purchases Globally

Data from the World Gold Council shows that in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. In the latest survey released by the association, 76% of responding central banks indicated they plan to increase their gold holdings over the next five years, while also expecting the US dollar reserve ratio to decline. This collective central bank accumulation trend provides solid fundamental support for gold prices.

Other Reasons for the Ongoing Rise of Gold

Besides the three main drivers above, the following factors are also pushing up gold:

• The global debt has reached $307 trillion, and high debt levels limit countries’ flexibility in interest rate policies. Monetary policy may lean more towards easing, which can lower real interest rates.

• Declining confidence in the US dollar also plays a role. A weaker dollar directly increases the attractiveness of gold priced in USD, attracting more capital inflows.

• Geopolitical risks such as the Russia-Ukraine war and tensions in the Middle East continue to escalate, boosting demand for safe-haven assets.

• In the short term, media coverage and social sentiment are also fueling capital inflows, triggering continuous upward trends.

It’s important to note that these short-term factors may cause sharp fluctuations and do not necessarily indicate a long-term trend. For Taiwanese investors, since gold is priced in USD, they also need to consider the impact of USD/TWD exchange rate fluctuations on their final returns.

Institutional Forecasts: Will Gold Prices Continue to Rise?

Despite recent volatility, many top global investment banks remain optimistic about the medium- to long-term outlook for gold.

J.P. Morgan’s commodities team characterizes 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 per ounce by the end of 2026, showing confidence in gold’s prospects.

Bank of America strategists are the most bold, setting a 2026 target of $5,000 and suggesting that gold could break the $6,000 mark next year.

Domestic jewelry chain brands’ gold jewelry reference prices have not fallen significantly, remaining above NT$1,100 per gram, reflecting market confidence in the strength of gold prices.

What Should Retail Investors Pay Attention to When Entering Now?

The long-term logic of gold’s rise remains unchanged, but operational strategies should vary based on individual circumstances:

Experienced short-term traders can fully leverage volatility. When price swings are clear, it’s easier to judge the direction of the market, creating more trading opportunities. Using economic calendars to track US data releases can help better grasp volatility before and after US market hours.

New investors should start with small amounts and avoid rushing to add more. Gold’s annual volatility is 19.4%, higher than the S&P 500’s 14.7%. Insufficient psychological resilience can lead to losses.

Long-term allocators planning to hold gold for the long haul should be prepared for potential sharp fluctuations. Gold’s cycle is extremely long; it could double within ten years or be halved. Choose based on your risk tolerance.

Portfolio allocation of gold as part of an investment mix is feasible, but do not allocate all funds solely to gold. Diversification is key to stability, and generally, gold should constitute a manageable proportion within your overall portfolio.

Profit-oriented strategies can be employed by holding long-term positions while taking advantage of short-term price movements. US data releases and major meetings often amplify gold’s volatility, but this requires experience and risk management skills.

Finally, note that physical gold transactions typically involve higher costs, generally between 5% and 20%. This should not be overlooked. The reason why gold keeps rising fundamentally stems from changes in the global economic landscape and declining risk appetite. While this trend is difficult to reverse in the short term, operational adjustments should be made flexibly according to individual situations.