International gold prices in 2025: Central bank accumulation drives growth, policy game intensifies

Over the past two years, gold prices have continued to rise, breaking through the $4,300 mark in October this year, creating the highest surge in nearly 30 years. Data shows that the gold increase in 2024–2025 approaches the highest peak in nearly 30 years, surpassing 31% in 2007 and 29% in 2010. Under the shadow of global economic uncertainty, gold has once again become a focus for investors. So, what are the fundamental factors driving the continuous surge in gold prices? What is the future trend of international gold prices? Is there still an opportunity to invest now?

Central Bank Accumulation as a New Driver, Gold Reserves Allocation Increasing

According to the World Gold Council (WGC), net gold purchases by global central banks reached 220 tons in Q3 2025, a 28% increase from the previous quarter. More notably, in the first nine months of 2025, central banks have accumulated approximately 634 tons of gold, slightly below the same period in 2024 but still far higher than other historical periods.

This reflects a reallocation of central bank gold reserves. In its June 2025 report on central bank gold reserve surveys, WGC stated that 76% of surveyed central banks believe that in the next five years, the proportion of gold in their total reserves will achieve a “moderate or significant increase.” At the same time, most central banks expect the “US dollar reserve ratio” to decline. This trend indicates that global central banks are reassessing asset allocation structures, with gold, as a “trustworthy” reserve asset, gaining strategic importance.

Three Core Factors Supporting International Gold Price Trends

Policy Uncertainty Sparks Safe-Haven Demand

At the beginning of 2025, a series of tariff policy signals directly boosted gold’s attractiveness. Policy-level uncertainties led to a significant increase in market risk aversion. Historical experience shows that during periods of policy uncertainty, such as the US-China trade war in 2018, gold prices typically experience a short-term surge of 5–10%. The current political and economic environment is recreating similar market psychology.

Interest Rate Policies and Gold Prices’ Negative Correlation

The Fed’s expectation of interest rate cuts is another major driver. Studies show that gold prices have a clear negative correlation with real interest rates—when rates fall, gold rises. This is because real interest rate = nominal interest rate – inflation rate. When the Fed cuts rates, the opportunity cost of holding gold decreases, increasing its relative attractiveness.

Based on CME interest rate futures data, the probability of the Fed cutting interest rates by 25 basis points at the December meeting is 84.7%. Investors can track changes in Fed policy expectations to judge the medium-term trend of gold prices. Notably, after the September FOMC meeting, gold prices fell instead, because the 25 bps rate cut was fully in line with market expectations and had been priced in advance. Meanwhile, Powell characterized this rate cut as a “risk management rate cut,” without indicating a continued easing cycle, leading to market adjustments in expectations for future rate cuts and triggering a technical pullback.

Structural Global Economic Issues Boost Gold Demand

As of 2025, global debt totals $307 trillion (IMF data). High debt levels limit the flexibility of interest rate policies in various countries. Central banks tend to implement more accommodative monetary policies, which suppress real interest rates and indirectly boost gold’s attractiveness. Additionally, geopolitical risks such as the Russia-Ukraine conflict and escalating Middle East tensions are reinforcing the safe-haven function of precious metals.

Hidden Drivers Not to Be Ignored

Besides the main factors above, market confidence in the US dollar also influences gold prices. When the dollar weakens or market confidence declines, gold priced in USD benefits, attracting more capital inflows. Media reports and social media sentiment also cause short-term capital surges into gold markets, leading to continuous surges. However, it’s important to note that these factors driving short-term volatility do not necessarily indicate a long-term trend. For Taiwanese investors, currency valuation of gold in USD/NTD exchange rate fluctuations should also be considered, as they may affect actual returns.

Institutional Forecasts on International Gold Price Outlook

Despite recent fluctuations, international financial institutions remain optimistic about long-term gold trends.

JPMorgan’s commodities team considers this correction a “healthy adjustment,” and after warning of short-term risks, they are more optimistic about the long-term outlook, raising their Q4 2026 target price to $5,055 per ounce.

Goldman Sachs remains optimistic, reaffirming a target of $4,900 per ounce by the end of 2026.

Bank of America also holds a positive view on precious metals, raising their 2026 gold target price to $5,000 per ounce, with strategists even suggesting that gold could hit $6,000 next year.

Jewelry retail data also reflects market expectations—domestic gold jewelry reference prices remain stable above NT$1,100 per gram, with no significant decline, indirectly confirming a medium-term bullish outlook on gold prices.

Practical Investment Advice for Retail Investors

Short-term Traders: Seize Volatility Opportunities

If you have some trading experience, the current volatility offers good opportunities for short-term trading. Market liquidity is ample, and price directions are relatively easier to judge, especially during sharp surges or drops, where bullish and bearish forces are clear. Experienced investors can ride the wave more easily. However, novice investors should start with small amounts to test the waters and avoid blindly increasing positions. Loss of discipline can lead to significant capital reduction. It’s recommended to use economic calendars to track US economic data to assist trading decisions.

Long-term Holders: Prepare Mentally

If you plan to buy physical gold for long-term holding, be prepared for significant fluctuations. Although the long-term trend is upward, you must assess whether you can tolerate sharp intermediate volatility. Also note that gold’s annual volatility averages 19.4%, not much lower than the S&P 500’s 14.7%, so volatility risk should be carefully considered.

Portfolio Diversifiers: Spread Investments for Stability

If incorporating gold into your overall investment portfolio, do not allocate all your assets to it. Gold’s investment cycle is very long, requiring over 10 years to achieve preservation goals, but prices could double or halve within that period. Diversification strategies are recommended to balance risks and avoid over-concentration in a single asset. Also, note that physical gold has higher transaction costs, usually between 5%–20%, so thorough evaluation is necessary before large purchases.

Hybrid Strategies: Long-term Holding + Short-term Trading

To maximize returns, you can hold gold long-term while capitalizing on short-term price fluctuations, especially during periods of increased volatility around US market data releases. This strategy requires substantial experience and risk management skills.

Overall, the international gold price in 2025 is supported by multiple factors. Short-term fluctuations are inevitable, but the medium- and long-term fundamentals remain unchanged. Regardless of the chosen investment approach, the key is to develop strategies based on your risk tolerance and investment horizon, avoiding blindly following the trend.