Will gold still have room to rise in 2025? Analyzing Taiwan's gold price trend chart to see global safe-haven demand

What Does the Correction After a Historic High Really Mean?

Entering the second half of 2024, the gold market has attracted widespread attention from investors. From the beginning of the year to mid-October, gold prices have risen to around $4,400 per ounce, hitting a record high. Subsequently, a technical correction occurred, but this rally has been truly remarkable—according to Reuters data, this surge is close to the highest levels in the past 30 years, surpassing the 31% increase in 2007 and the 29% increase in 2010.

For Taiwanese investors, while observing international gold price trends, it is also necessary to consider fluctuations in the USD/TWD exchange rate. So, what is the fundamental driving force behind this gold rally? Is there still potential for further increases?

Three Major Catalysts Driving Gold Strength

Rising Tariff Policies and Market Uncertainty

At the start of 2025, policy changes directly triggered accelerated fluctuations in gold prices. The successive implementation of tariff measures significantly increased global market uncertainty, boosting risk aversion sentiment. Investors flocked to traditional safe-haven assets like gold. Historical experience shows that periods of policy uncertainty often trigger short-term gold price increases of 5-10%.

Federal Reserve Rate Cut Expectations and Actual Inverted Real Rates

Gold prices have a typical negative correlation with real interest rates—when real rates decline, the opportunity cost of holding non-yielding gold decreases, making gold more attractive. The Fed’s rate cuts will directly lower nominal interest rates, while real interest rates are calculated as nominal rates minus inflation.

For example, at the September FOMC meeting, the Fed cut rates by 25 basis points as expected, but this move had already been priced in by the market. Additionally, Powell characterized this rate cut as a “risk management” measure and did not hint at further easing, leading to divergence in market expectations. As a result, gold prices faced short-term pressure. According to CME interest rate futures, the market expects an 84.7% probability that the Fed will cut rates by another 25 basis points in December, which is an important reference for short-term gold price trends.

Long-term Support from Central Bank Gold Purchases

The World Gold Council reports that in Q3 2024, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter, with total purchases in the first nine months reaching approximately 634 tons. Notably, in the council’s survey, 76% of responding central banks indicated they plan to increase their gold reserves over the next five years, while most expect the proportion of USD reserves to decline. This reflects a trend toward diversification of international reserves, providing medium- to long-term support for gold.

Deep-Rooted Supporting Factors Cannot Be Ignored

Beyond the main drivers above, gold’s resilience is also supported by multiple background factors.

The global debt has surpassed $307 trillion (IMF data). High debt levels limit the flexibility of monetary policies worldwide. Central banks tend to adopt easing measures to alleviate debt pressures, indirectly lowering real interest rates and reinforcing gold’s safe-haven appeal. Meanwhile, declining confidence in the US dollar, ongoing Russia-Ukraine geopolitical tensions, and tense Middle East situations all boost demand for precious metals as safe assets.

It is also worth noting that continuous reports from social media and financial media have intensified short-term capital inflows. While this pushes prices higher, it also amplifies volatility. For Taiwanese investors, this means paying attention to emotion-driven rapid fluctuations in gold price charts.

How Do Institutions View Gold Prices in 2025 and Beyond?

Despite recent corrections, major global financial institutions remain optimistic about gold’s outlook.

J.P. Morgan’s commodities team considers this correction a normal technical adjustment. While warning of short-term risks, they reaffirm their bullish long-term outlook and have raised their Q4 2026 target price to $5,055 per ounce. Goldman Sachs maintains a target of $4,900 by the end of 2026, while Bank of America is more aggressive, raising its gold target to $5,000, with some analysts even predicting gold could hit $6,000 next year.

Looking at the physical gold market, well-known brands like Chow Tai Fook, Luk Fook Jewelry, Chao Hong Ji, and Chow Sang Sang in mainland China still price their pure gold jewelry above 1100 RMB/gram, with no obvious decline. This indirectly confirms market confidence in gold’s long-term value.

How Should Taiwanese Investors Respond?

Opportunities and Risks in Short-term Trading

If you have some trading experience, the current volatile environment offers more short-term opportunities. Liquidity is ample, and the direction of price movement is relatively predictable. Especially around data releases, price fluctuations often become significantly amplified, creating windows for precise operations. However, this requires solid technical analysis and risk management skills.

For novice investors, it is strongly advised not to chase highs blindly. Small-scale testing is necessary. Before increasing your investment, ensure you understand your risk tolerance. Tracking US economic data releases via economic calendars can help optimize trading timing.

Considerations for Long-term Holding

If you plan to buy physical gold for long-term allocation, be prepared for potential large fluctuations. Gold’s annual volatility is 19.4%, which is not low—higher than the S&P 500’s 14.7%. Gold cycles are long; holding for over 10 years is generally needed to see value preservation and appreciation, but during this period, prices may double or halve.

Additionally, transaction costs for physical gold are relatively high, typically between 5% and 20%, so over-allocating is not advisable. A more prudent approach is to allocate gold moderately within your overall investment portfolio rather than putting all funds into a single asset.

Balancing Medium- and Long-term with Short-term Strategies

If you have strong risk control capabilities, consider holding long-term while using price fluctuations for short-term trading to maximize gains—especially around key US economic data releases, where volatility tends to expand. However, this approach requires good mental discipline and stop-loss awareness.

Three Key Points to Remember:

• Gold prices are also highly volatile, with an average annual amplitude of 19.4%. Do not underestimate the risks.
• Gold’s benefit cycle is long; it takes over 10 years to truly reflect its value-preserving function, during which multiple sharp adjustments may occur.
• Transaction costs for physical gold are high, making frequent buying and selling impractical.

Overall, gold remains a globally trusted reserve asset with a long-term upward trend intact. However, specific trading strategies should be tailored to individual experience, risk appetite, and financial situation. Under the guidance of Taiwan’s gold price charts, choosing a participation method that suits you is key.