Gold rally sparks investment debate: How will gold prices evolve after 2025?

As 2024 comes to an end, the instability factors in the global financial markets have surged, and gold has once again become the market focus. After reaching a historic high of $4,400 per ounce in mid-October, although a technical correction occurred, market participation remains hot. Many investors’ questions are: Will the gold rally continue? Is it too late to enter at this stage? How should we respond to gold price fluctuations?

To truly grasp the future of gold, one must understand the fundamental logic driving its rise. The following will analyze the key drivers behind this round of gold market trends:

Why Is Gold Continuing to Rise? An In-Depth Analysis of Three Major Factors

Market Uncertainty Caused by Tariff Policies

The new policy measures on tariffs have become the direct trigger for the 2025 gold price surge. Intensive trade policy adjustments have increased market risk aversion, prompting investors to turn to gold for protection. Historically, similar periods of policy uncertainty typically push gold prices up by 5% to 10% in the short term.

Expectations of Federal Reserve Rate Cuts Continue to Ferment

Expectations of rate cuts by the Federal Reserve weaken the dollar’s strength, directly reducing the opportunity cost of holding gold. If economic slowdown is further confirmed, the pace of rate cuts may accelerate, providing long-term support for gold. Market data shows an 84.7% probability that the Fed will cut interest rates by 25 basis points at the December meeting.

Interest rates and gold show a clear inverse relationship: when interest rates fall, gold’s relative attractiveness increases. This also explains why gold price fluctuations are almost perfectly synchronized with Fed expectations.

Global Central Banks Continue to Increase Gold Reserves

According to the World Gold Council report, net gold purchases by central banks in Q3 2024 reached 220 tons, a 28% increase from the previous quarter. The total gold purchased in the first nine months was about 634 tons, slightly lower than the same period in 2023 but still far above other periods.

More notably, 76% of surveyed central banks expect to increase their gold holdings as a percentage of foreign exchange reserves over the next five years, while also expecting the dollar reserve ratio to decline. This reflects a continued rising confidence among global central banks in gold as a reserve asset.

Other Market Factors Supporting the Gold Rally

High Global Debt and Easing Monetary Policy Expectations

By the end of 2024, global debt has reached $307 trillion. The enormous debt level limits central banks’ room for interest rate adjustments, making future monetary policy more inclined toward easing. Lower real interest rates will directly enhance gold’s investment appeal.

Declining Confidence in the US Dollar

When the dollar faces depreciation pressure or market trust in it declines, gold priced in dollars benefits, attracting more capital inflows.

Escalating Geopolitical Risks

The ongoing Russia-Ukraine conflict and tense Middle East situation boost demand for safe-haven assets. Gold, as a traditional safe-haven, reasserts its status, often triggering short-term price volatility.

Social Media and Market Sentiment Amplification

Continuous news reports and social discussions create emotional resonance. Large amounts of short-term capital ignore fundamentals and rush in, intensifying the gold surge.

Historical Data Supporting Long-Term Bullishness

According to Reuters data, the gold price increase from 2024 to 2025 approaches the highest in nearly 30 years, surpassing the 31% in 2007 and 29% in 2010 records.

Mainstream Institutions’ Views on the Future of Gold

Despite short-term corrections, major global investment banks remain optimistic about gold:

J.P. Morgan Commodities 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, with a steadfast stance.

Bank of America is more aggressive, raising its 2026 target to $5,000 per ounce, and recent strategists suggest gold could break $6,000 next year.

International jewelry chain brands in mainland China still price pure gold jewelry above 1,100 RMB/gram, with no obvious decline, indicating market confidence.

How Should Retail Investors Respond to the Gold Rally?

Understanding the logic behind the rising gold prices, investors should recognize that the current gold market has not ended; there are opportunities in both medium-long and short-term. However, blindly following the trend is unwise, especially for novice investors who may chase highs and sell lows amid volatility, repeatedly suffering losses.

For experienced short-term traders

Volatile markets offer excellent trading opportunities. Liquidity is ample, and price swings are clear and easy to judge, especially during sharp rises and falls. Skilled traders can ride the trend, using economic calendars to track US data releases, and profit from fluctuations around key moments.

For novice investors

If you want to participate in recent volatility, remember: start with small amounts to test the waters, and avoid aggressive increases. Panic selling is a major cause of losses; learn risk control first before making decisions.

For long-term holders

Buying physical gold for long-term holding requires mental preparation for potential significant corrections along the way. Confirm that you can withstand such volatility before entering.

For asset allocators

Gold’s volatility is comparable to or even higher than stocks (annual average volatility 19.4% vs. S&P 500’s 14.7%), so it is not advisable to concentrate too much capital in gold. Diversification remains the prudent approach.

For those seeking maximum returns

A combined strategy of long-term holding and short-term trading can be attempted, especially around the release of US economic data when volatility is most intense. However, this approach requires market experience and risk management skills.

Three key points investors must remember

First, gold’s average annual volatility is comparable to stocks, so be prepared for short-term pullbacks.

Second, gold investment cycles are long. Over a ten-year horizon, it can preserve and increase value, but within that period, it may double or be cut in half.

Third, physical gold has relatively high transaction costs, usually between 5% and 20%, which must be considered in return calculations.

In summary, the current gold rally remains well-supported, and the medium-long-term bullish logic remains unchanged. However, investors should remain cautious of short-term risks, especially around US economic data releases and key meetings.