## Will Gold Prices Reach New Highs Again in 2025? Four Major Factors Determining the Upward and Downward Trends

Since hitting a historic high of $4,400 per ounce in October 2024, the gold market has been anything but calm. After a pullback, it rebounded again, and investors are asking the same question: **Where are gold prices headed next? Is it still too late to buy now?**

To understand this question, we must first grasp the real logic behind what drives gold prices. What forces are supporting this rally? Can they be sustained in the future? Let's analyze them one by one.

## What Is the True Driver Behind the Surge in Gold Prices?

**First, look at this data:** The increase in gold from 2024 to 2025 has approached the highest levels in nearly 30 years, surpassing the 31% rise in 2007 and the 29% in 2010. This is not a minor rebound but a genuine structural upward trend.

There are four core driving factors:

### Factor 1: Uncertainty Fuels Safe-Haven Demand

At the start of a new year, changes in trade policies have directly ignited market risk aversion. Continuous adjustments to tariffs make the market full of variables, and this uncertainty has always been gold’s "best friend."

Historical examples are enough to illustrate: During the trade tensions of 2018, gold experienced short-term gains of 5-10% amid policy disputes. When the market is unsure about the future, gold becomes the standard "insurance asset."

### Factor 2: Expectations of Interest Rate Policies

This logic may seem complex but is actually simple: **Lower interest rates → Dollar depreciation → Increased attractiveness of gold**

The Federal Reserve’s rate cut decisions influence real interest rates (nominal rate minus inflation), and real interest rates have an inverse relationship with gold prices. The lower the interest rate, the lower the opportunity cost of holding gold, and the more people buy gold.

Why didn’t the rate cut in September 2024 push gold prices higher as expected? Because the market had already priced in this expectation. The key question is whether there will be further cuts—according to CME interest rate futures data, there is an 84.7% chance of another 25 basis point cut in December. This expectation is a real support for gold prices.

### Factor 3: Continuous Central Bank Gold Purchases

This is an underestimated signal. According to the World Gold Council, in Q3 2024, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. In the first nine months, they bought approximately 634 tons of gold.

More importantly, surveys show that 76% of responding central banks plan to increase their gold reserves over the next five years, and most expect the share of US dollar reserves to decline. **This indicates that central banks worldwide are actively diversifying their reserves, and gold’s value as a "hard asset" is being reaffirmed.**

### Factor 4: Long-Term Support from the Macro Environment

- **Global debt expansion**: By 2024, global debt has reached $307 trillion. High debt levels tend to lead countries to adopt loose monetary policies, which suppress real interest rates.
- **Declining confidence in the US dollar**: When global confidence in a single reserve currency wanes, gold priced in dollars benefits.
- **Geopolitical risks**: Conflicts like Russia-Ukraine and Middle East tensions continue to boost demand for safe-haven assets.
- **Market sentiment**: Social media buzz and continuous news coverage attract short-term capital inflows, reinforcing the upward trend.

## What Do Experts Say? Summary of Gold Price Forecasts for Next Year

Despite recent volatility, mainstream institutions remain optimistic about the medium- and long-term prospects for gold:

- **JPMorgan**: Raised the Q4 2026 target price to $5,055 per ounce, considering the current correction a "healthy adjustment."
- **Goldman Sachs**: Maintains a target price of $4,900 per ounce by the end of 2026.
- **Bank of America**: The most aggressive, expecting gold to potentially break through $6,000 next year, and has raised the 2026 target to $5,000 per ounce.
- **Market feedback**: Domestic jewelry prices for pure gold jewelry remain stable above 1,100 RMB per gram, with no significant decline.

The logic behind these forecasts points to the same conclusion: **The medium- and long-term supply-demand imbalance for gold remains, and supporting factors are still in place.**

## Price Trend Analysis: Is It Still a Good Time to Enter?

After understanding these logics, the key question is: **Is it suitable for retail investors to enter now?**

The answer depends on your risk tolerance and trading style:

**If you are a short-term trader**: There are still opportunities. The gold market has ample liquidity, and volatility provides room for operations, especially around economic data releases and central bank meetings, where short-term fluctuations tend to amplify. But you must have trading experience and strict risk controls.

**If you are a beginner trying short-term trades**: I advise starting with small funds and not following the herd blindly. Gold’s average annual volatility is 19.4%, higher than the S&P 500’s 14.7%. Chasing high and getting trapped at high prices is a story repeated daily by retail investors.

**If you want to buy physical gold for long-term holding**: Be mentally prepared—your investment could double in ten years or be halved. The key is whether you can withstand significant fluctuations along the way. Also, transaction costs for physical gold range from 5% to 20%, which must be factored in.

**If you want to allocate gold in your portfolio**: This is the most rational approach. But don’t put all your assets into it; gold’s volatility is not low, and diversification is more prudent.

**To maximize returns**: You can adopt a "long-term holding + short-term trading" strategy—adding tactical entries and exits based on price swings beyond your core position. But this requires considerable experience.

## Investment Tips: Don’t Overlook These Details

1. **Pay attention to economic data and central bank meetings**: Gold tends to be more volatile around these events, making them prime opportunities for short-term trades.
2. **Exchange rate factors**: For investors in Taiwan, the gains from international gold prices also depend on USD/TWD exchange rate movements, which can affect final returns.
3. **Cost control**: Avoid over-trading; physical gold has high costs, and frequent buying and selling can significantly erode profits.
4. **Psychological readiness**: History shows that gold cycles are long. Short-term declines of 50% are possible, but over ten years, prices may double. Staying committed is crucial.

In summary, the analysis indicates that gold prices still have room to grow in 2025, but before entering, ask yourself three questions: How much volatility can I tolerate? Am I aiming for short-term gains or long-term allocation? How much capital can I risk for trial and error?

Once these questions are answered, your trading direction will become clear.