Where will the international gold price reach in 2025? Clues from central bank actions

Gold is hot again. From last year to this year, this wave of market行情 can be called rare in the past 30 years—almost a 30-year high in gains, surpassing 31% in 2007 and 29% in 2010. After breaking through $4,300 in October and approaching a new all-time high near $4,400, the market began to differentiate: some are optimistic about further rises, some worry about a pullback at high levels, and others are watching to see if they should get in.

Instead of guessing when gold prices will top out, it’s better to understand who is driving this行情.

Central banks are quietly accumulating gold; this is not a signal but a warning

The most noteworthy details are often overlooked. According to data from the World Gold Council (WGC), in Q3 2025, 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—these are not small numbers.

Even more interesting is the change in central banks’ attitude. A WGC survey in June found that 76% of responding central banks plan to increase their gold holdings as a proportion of foreign exchange reserves over the next five years, while most expect the dollar reserve ratio to decline. What does this indicate? Global central banks are voting with their actions—gold’s status is rising.

Central banks do not operate aimlessly. Their increased gold holdings are equivalent to betting on the long-term trend of the dollar. When central banks worldwide are doing the same thing, it often reflects a shared concern: increased economic uncertainty.

Fed rate cut expectations push up gold prices, but the logic isn’t as simple as you think

Every monetary policy decision by the Federal Reserve directly impacts the international price of gold. Here’s a key concept: Real interest rate = Nominal interest rate - Inflation rate.

When real interest rates decline, the opportunity cost of holding gold decreases, making gold more attractive relative to other assets. When a rate-cut cycle arrives, gold often rises.

An interesting case is the September FOMC meeting. The Fed cut rates by 25 basis points as expected, but gold prices did not continue to rise; instead, they pulled back. Why? Because this rate cut was fully priced in and already digested by the market. Powell characterized this rate cut as a “risk management rate cut,” without signaling an acceleration of future cuts, leading the market to reassess the pace of future rate cuts.

According to CME interest rate tools, the probability of another 25 basis point rate cut in December is 84.7%. Investors can use FedWatch data changes as a reference for judging gold’s trend.

Tariff policies, geopolitical risks, monetary policy—three driving forces

After Trump took office, a series of tariff policies directly triggered the beginning of gold price increases in 2025. Tariff policies increased market uncertainty and clearly boosted risk aversion sentiment. Historical experience (such as the US-China trade war in 2018) shows that during periods of policy uncertainty, gold prices typically rise by 5–10% in the short term.

Global high debt levels also reinforce gold’s safe-haven attribute. By 2025, global debt totals $307 trillion, meaning limited policy flexibility for countries, with a tendency toward monetary easing, which further depresses real interest rates.

Geopolitical conflicts persist. The Russia-Ukraine war continues, and instability in the Middle East persists. These factors keep boosting demand for safe assets. Coupled with social media opinion effects, short-term capital keeps flowing in, forming a self-reinforcing cycle of continuous gains.

Declining confidence in the dollar also benefits gold as a dollar-denominated asset—when the dollar weakens, gold’s attractiveness increases.

How do institutions view the future? Four major investment banks give optimistic forecasts

J.P. Morgan’s commodities team believes the recent correction is a “healthy pullback,” raising their Q4 2026 target price to $5,055 per ounce.

Goldman Sachs maintains a target of $4,900 per ounce by the end of 2026, remaining optimistic about gold’s prospects.

Bank of America is even bolder, raising their 2026 target to $5,000 per ounce, with strategists suggesting gold could hit $6,000 next year.

The underlying logic behind these forecasts is consistent: the fundamentals supporting long-term gold appreciation have not changed. Central bank accumulation, a weakening dollar, and declining real interest rates—these three factors are unlikely to reverse in the short term.

Market signals from physical gold jewelry also show signs. Major jewelry brands like Chow Tai Fook, Luk Fook, Chao Hong Ji, and Chow Sang Sang still quote mainland China’s pure gold jewelry at over 1100 RMB/gram, with no obvious decline. This indicates market expectations for gold prices remain strong.

Is it too late to enter now? It depends if you’re short-term or long-term

Many people are concerned about “whether they can still buy now.” The answer depends on your trading cycle and risk tolerance.

If you have short-term experience, the volatility is an opportunity. The market liquidity is ample, and the logic of rises and falls is relatively clear, especially during sharp surges or drops when bullish and bearish forces are obvious. But you must be aware of key moments like US economic data releases and central bank meetings, as these are often the most volatile periods.

If you’re a beginner wanting to trade short-term, it’s recommended to start with small capital and avoid blindly increasing positions. Gold’s average annual volatility is 19.4%, higher than the S&P 500’s 14.7%. If your mindset collapses, losses can come very quickly.

If you want to hold physical gold long-term, be prepared for significant short- to medium-term fluctuations. Gold’s cycle is long; holding for over 10 years can indeed preserve and increase value, but during that decade, it could double or be cut in half. Also, transaction costs for physical gold are relatively high, usually between 5–20%.

The most prudent approach is to diversify your portfolio. Gold can be part of your investment mix as a hedge, but don’t put all your assets into it. Consider short-term hedging during periods of increased volatility around US market data releases, based on a long-term holding strategy, but this requires experience and risk management skills.

Key reminders

The volatility of international gold prices is comparable to stocks; investment decisions should be based on your own risk preferences rather than herd mentality.

Central banks are increasing holdings, institutions are optimistic, and fundamentals support the trend—these three points suggest room for further upside. But always be cautious of volatility risks around US economic data and central bank meetings.

Next Fed meeting, non-farm payrolls, PCE inflation index—these are all potential turning points for gold prices. Keeping an eye on the economic calendar in advance is much wiser than blindly chasing rallies.