Behind the Gold Price Surge: Is There Still Hope for International Gold Market in 2025?

In October this year, the international gold market hit a record high, approaching $4,400 per ounce at one point. Although there was a subsequent pullback, market enthusiasm remains strong, and investors are generally asking: Will gold prices continue to rise? Is it still a good time to enter now?

To answer these questions, we first need to understand the key forces driving the surge in gold prices.

The Fundamental Reasons Behind the Hot International Gold Market

This round of gold rally is indeed unusual. According to Reuters statistics, the gold price increase in 2024-2025 is approaching the highest in nearly 30 years, surpassing 2007’s 31% and 2010’s 29%. There are three main driving forces behind this:

1. Policy Uncertainty Sparks a Safe-Haven Rush

Since Trump took office, a series of tariff policies have followed one after another, directly triggering market risk aversion. Historical experience shows that during periods of policy uncertainty (such as the US-China trade war in 2018), gold prices typically rise 5-10% in the short term. When the market is full of variables, gold as a safe-haven asset naturally becomes the first choice.

2. Expectations of Fed Rate Cuts Boost Gold Appeal

A rate cut by the Fed causes two chain reactions: a weakening dollar and a decrease in the opportunity cost of holding gold. This directly enhances gold’s relative value.

Historical data shows that gold prices have a clear negative correlation with real interest rates—the lower the interest rates, the more attractive gold becomes. Real interest rate equals nominal interest rate minus inflation rate, and Fed decisions greatly influence nominal interest rates.

According to CME interest rate tools, the probability of the Fed cutting interest rates by 25 basis points at the December meeting is 84.7%. Such data serve as important references for judging the trend of the international gold market.

3. Central Banks Continue to Increase Gold Holdings

Data from the World Gold Council (WGC) shows that in Q3 2024, global central banks net purchased 220 tons of gold, a 28% increase from the previous quarter. In the first nine months, central banks have accumulated about 634 tons of gold, still far above historical levels.

More importantly, a survey report released by WGC indicates that 76% of surveyed central banks believe the proportion of gold will be “moderately or significantly increased” in the next five years, and most expect the dollar reserve ratio to decline. This suggests that global demand for gold as a reserve asset is rising.

Other Factors Also Contributing to the Surge

Global debt is high (reaching $307 trillion as of 2024), and countries have limited room for interest rate policies. Central banks tend to adopt easing policies, which further depress real interest rates.

Geopolitical risks (such as the Russia-Ukraine war and Middle East tensions) are also intensifying safe-haven demand. Coupled with social media and news bombardments, short-term capital floods into the market regardless of cost, further pushing up gold prices.

However, it’s important to note that these short-term factors may cause intense volatility and do not necessarily indicate a long-term trend.

What Do Experts Say About the Outlook for the International Gold Market?

Despite recent fluctuations in gold prices, major institutions remain optimistic about the future:

• JPMorgan Commodity Team: believes the pullback is a “healthy correction,” raising the Q4 2026 target price to $5055 per ounce
• Goldman Sachs: maintains a target price of $4900 per ounce by the end of 2026
• Bank of America: strategists recently stated that gold could even challenge the $6000 mark next year

From the jewelry retail perspective, well-known brands like Chow Tai Fook and Luk Fook Jewelry still quote pure gold jewelry prices above 1100 RMB/gram, with no significant decline observed.

Overall, the medium- and long-term logic supporting the international gold market remains unchanged.

How Should Retail Investors Operate Now?

If you are a short-term trader, volatile markets can bring many opportunities. Liquidity is ample, and the direction of price movement is relatively easier to judge, especially during sharp rises or falls. But if you are a beginner wanting to play short-term, remember: start with small amounts to test the waters, and avoid blindly increasing your position. A poor mindset can easily lead to significant losses.

If you want to buy physical gold for the long term, be prepared to endure significant fluctuations. Although the long-term outlook is bullish, you need to carefully consider whether you can tolerate the intense volatility along the way.

If you want to allocate gold in your investment portfolio, it’s definitely feasible, but don’t put all your assets into it. Gold’s annual volatility is 19.4%, higher than the S&P 500’s 14.7%.

To maximize returns, you can hold long-term while seizing short-term price movements, especially around US market data releases. However, this requires certain experience and risk control capabilities.

A few final reminders:

• Gold cycles are very long; a horizon of over 10 years is needed to reflect its value as a store of value. It can double in price or halve midway.
• Physical gold trading costs are relatively high (5%-20%).
• Don’t put all your eggs in one basket.

Market volatility is normal. Understanding the logic behind the international gold market and making rational decisions are the best strategies.