The truth behind gold reaching new highs: When is the best time to buy, and how to get the most value?

How fierce is this wave of gold rally?

Since October 2023, gold has embarked on a spectacular upward trend. In just over a year, the price has surged from $2,700 to break through the $4,000 mark. Market analysis agencies predict that the average gold price in 2025 may be around $3,400, and by 2026, it could potentially surpass $4,275.

Simply put, this round of gold rally has already set new all-time highs and is not over yet. The question is, many people are now stuck on one issue: Is it still a good time to buy gold? When is the cheapest time to buy? Is this correction an opportunity or a trap?

Why does gold keep going up? There is only one fundamental reason

Gold itself does not generate cash flow; its price fluctuations are essentially driven by supply and demand. Why does supply and demand change? Ultimately, it’s because investors’ trust in other assets is declining.

There are three main drivers behind this:

First reason: The credibility of the US dollar is being eroded

Since 2020, the US has implemented unlimited quantitative easing, which has actually unleashed the inflation monster. By 2022, aggressive interest rate hikes aimed at controlling inflation began. As a result, US Treasuries depreciated significantly, and global investors’ trust in the dollar and US debt was visibly shaken. With trust waning, investors started withdrawing cash and bonds, shifting towards hard assets like gold.

Second reason: Alternative assets are rising, creating new competition

Bitcoin has broken through $100,000, and even the US President has said it should be considered a strategic reserve. What does this indicate? It shows that the global reliance on the dollar system is waning. Due to geopolitical instability, central banks worldwide are increasing their demand for safe assets, and gold naturally becomes a hot commodity.

Third reason: The rules of the banking system have changed

Basel agreements have reclassified gold from Tier 3 capital to Tier 1 capital, placing it on the same level as government bonds and cash. Banks are thus more willing to stockpile gold because, compared to continuously printed fiat currency, gold’s scarcity and extraction costs are tangible, and its value preservation is genuine.

Is it worthwhile to buy gold now?

Short answer: Maybe, but wait.

Long-term, gold has undeniable investment value, especially in an environment where the US is still cutting interest rates and the dollar remains weak. As a first-class asset, gold’s attractiveness will only increase. But this also means that, with gold already so high, the market’s air has thickened, and prices cannot rise indefinitely.

The competition has also increased. Bonds are becoming attractive in a low-interest-rate environment, and Bitcoin is competing for investors’ money. Our judgment is that, gold will continue to rise in the future, but the pace will slow down, and volatility may increase.

A comparison makes this clear:

• Bitcoin vs Gold: Over the past year, Bitcoin’s gains far exceeded gold’s, but its volatility is also much higher. For investors seeking stability, gold remains more suitable.
• US Treasuries vs Gold: US bonds are now at low levels and look attractive from a valuation perspective; gold is already high, and short-term gains may slow down.

When is the best time to buy gold at the lowest price? Technical analysis provides an answer

Rather than blindly following the trend, it’s better to wait for a correction. The best entry point is when gold prices fall back.

From a technical perspective, gold is still in an upward channel, and the Bollinger Bands indicator is very useful. When gold prices approach the lower band of the Bollinger Bands, it’s a signal to enter. Operating along the Bollinger Bands channel can help avoid getting caught at high prices.

Simply put, if you want to know when gold is cheapest to buy, the answer is: wait until the price drops to the lower Bollinger Band. Entering at this point allows you to buy at a relatively low level and avoid chasing high prices.

Unless the US government uses political power to force central banks to hold a certain proportion of US debt, the current economic landscape suggests that the long-term upward trend of gold is hard to change. As prices decline, long-term investors should consider entering.

How to invest in gold at the lowest cost?

Physical gold: Buying gold bars or jewelry is not recommended. The spread is too large, liquidity is poor, and storage costs are high. For individual investors, it’s simply not cost-effective.

Gold futures and options: Liquidity is decent, but account opening thresholds are high, margin requirements are substantial, and capital efficiency is low. Options returns are nonlinear and complex, making them unsuitable for ordinary investors.

Gold CFD contracts: This is the right approach for individual investors. They track spot gold prices, support leverage trading, but don’t require frequent rollovers like futures, nor are they as complicated as options. Simple, flexible operation, low costs, making it an ideal tool.

Who should invest in gold?

Honestly, central banks are investing, hedge funds are investing, and individual investors should also invest.

• Central banks: Gold can hedge against inflation and serve as strategic reserves, standing the test of history.
• Institutional investors: Gold is a must-have asset class, with low correlation to other assets, helping to smooth net asset value fluctuations and manage risk.
• Individual investors: An important tool for diversification, gold inherently provides hedging and inflation resistance, and long-term holding benefits asset appreciation.

The key is that each type of investor should choose the most suitable tools and timing, rather than blindly following the crowd.

Conclusion

The underlying logic behind this gold rally includes: declining US dollar credibility, rising alternative assets, and changes in banking regulations. Fundamentally, gold will continue to rise in the medium to long term; technically, a correction is the real entry point.

Investing in gold isn’t mysterious—just choose the right tool (CFD is most suitable for retail investors), wait for the right timing (the lower Bollinger Band is ideal), and adjust your mindset (don’t chase highs). When is the cheapest time to buy gold? When the market is in panic and prices are correcting. Patient investors will find opportunities in this rally.