Hong Kong Gold Price Trends Observation: Opportunities and Challenges for Gold Investment in 2025

From 2024 to early 2025, the trend of gold prices in Hong Kong has attracted significant attention. International spot gold XAUUSD surged past $4,400 per ounce in October, reaching a historic high, followed by a correction, but the long-term upward trend remains unchanged. For Hong Kong investors, understanding the intrinsic logic behind this gold price rise is essential to better seize market opportunities.

Why Is Gold Continuing to Climb? Three Core Driving Factors

Hedge demand driven by policy uncertainty

Entering 2025, international trade policies face major changes, and market risk aversion has noticeably increased. Historical data shows that during periods of policy uncertainty (such as trade frictions in 2018), gold prices typically experience a short-term rally of 5–10%. Such events increase market risk premiums, prompting investors to turn to traditional safe-haven assets like gold.

Expected effects of the Federal Reserve’s policy shift

The Fed’s interest rate cuts have a profound impact on gold prices. According to economic principles, real interest rate = nominal interest rate - inflation rate. When interest rates decline, the opportunity cost of holding gold decreases, making gold more attractive. Market data indicates a clear negative correlation between gold prices and real interest rates—as rates fall, gold prices rise.

Based on CME interest rate tools, the probability of the Fed cutting interest rates by 25 basis points at the December meeting is as high as 84.7%. Investors can track changes in Fed rate cut expectations as an important reference for gold price trends.

Central banks worldwide increasing gold reserves

According to the World Gold Council (WGC), net gold purchases by central banks in Q3 2024 reached 220 tons, a 28% increase from the previous quarter. In the first nine months, central banks accumulated about 634 tons of gold, still significantly higher than other historical periods.

In the WGC’s 2025 central bank gold reserve survey, 76% of respondents believe that the proportion of gold in their reserves will be “moderately or significantly increased” over the next five years, while most expect the “US dollar reserve ratio” to decrease accordingly. This reflects a sustained long-term demand for gold from global central banks.

Other Key Factors Supporting the Gold Price Trend in Hong Kong

Global high debt environment and monetary easing expectations

By 2025, global debt totals $307 trillion. High debt levels limit countries’ monetary policy flexibility, leading to a bias toward easing policies, which indirectly suppress real interest rates and enhance gold’s allocation value.

Structural shift in confidence in the US dollar

When the dollar weakens relative to other currencies or market confidence in the dollar declines, gold priced in USD benefits and attracts international capital inflows. For Hong Kong investors, this also means that USD/HKD exchange rate fluctuations can indirectly impact gold returns denominated in HKD.

Geopolitical uncertainties

Ongoing tensions in Russia-Ukraine, conflicts in the Middle East, and other events increase safe-haven demand for precious metals, often triggering short-term market volatility and capital inflows.

How Do International Institutions View the 2025 Gold Outlook?

Despite recent technical adjustments, major investment institutions remain generally optimistic about gold’s medium- to long-term trend:

J.P. Morgan Commodity Team views this correction as a “healthy technical adjustment” and, after cautious assessment of short-term risks, has raised its Q4 2026 target price to $5,055 per ounce.

Goldman Sachs maintains its end-2026 target of $4,900 per ounce.

Bank of America is the most optimistic, raising its 2026 gold target to $5,000, with recent strategists suggesting that gold could even break through $6,000 next year.

From the physical gold market perspective, well-known jewelry brands Chow Tai Fook, Luk Fook Jewelry, etc., continue to quote pure gold jewelry prices above 1,100 HKD/gram, with no significant decline, reflecting ongoing market recognition of gold’s value.

Different Investor Strategies for Gold in Hong Kong

For experienced short-term traders

Current volatile markets offer abundant short-term opportunities. With ample liquidity, price directions are relatively easier to grasp, especially during sharp rises or falls. It is recommended to capitalize on increased volatility around US economic data releases for short-term trading.

For novice investors

Avoid blindly chasing highs. It is advisable to start with small amounts to test the waters and gradually accumulate trading experience. Use economic calendars to track key US economic data, aiding market judgment. The key is to develop discipline and avoid impulsive decisions due to volatility.

For long-term holders

If planning to hold physical gold long-term, be aware that gold’s average annual volatility is 19.4%, comparable to the stock market. Also consider transaction costs (usually 5%–20%) and potential medium-term corrections.

For portfolio allocators

Gold has high volatility and is not suitable as a sole holding. It is recommended to maintain an appropriate proportion within the overall investment portfolio, leveraging gold’s hedging features to balance other asset risks.

For maximum return seekers

You can trade based on short-term price fluctuations while holding long-term positions, especially around US market data releases. This requires certain market analysis skills and disciplined risk management.

Key Risk Warnings

When planning gold investment in Hong Kong, keep the following points in mind:

Gold’s annual volatility is about 19.4%, comparable to the S&P 500’s 14.7%, and its volatility is no less than stocks. Be cautious when choosing entry points based on market timing, assessing your risk tolerance carefully.

Gold investment cycles are relatively long. Over a 10+ year horizon, gold has good hedging potential, but extreme fluctuations such as doubling or halving can occur within this period.

Physical gold trading costs are relatively high; avoid excessive frequent trading. Also, do not concentrate your investments; follow diversification principles and allocate funds across multiple asset classes.

Overall, the current trend of gold prices in Hong Kong reflects deep changes in the global economy and policy environment. Whether driven by safe-haven demand, central bank reserve adjustments, or interest rate expectations, gold still has room to rise in the medium term. Rationally assess your risk tolerance, choose appropriate strategies based on your investment horizon, and make the most informed decisions.