2025 Gold Market Outlook: Long-term Opportunities from Historical Trends

Entering the second half of 2024, a “precious metals boom” is sweeping through the global investment markets. Gold touched the $4,400 per ounce mark in mid-October, and although it retraced afterward, market participation remains high. The most pressing questions for investors in this rally are: How much further can this rally go? Is it too late to enter now?

To find the answers, one must deeply understand the core factors driving gold price movements.

The Three Core Drivers Behind Gold’s Continuous New Highs

Analyzing ten years of historical data on gold price charts, we can clearly see that each upward cycle originates from specific macroeconomic changes. The current rally is no exception.

Policy Uncertainty Sparks Safe-Haven Demand

In early 2025, a series of tariff measures introduced by the US government directly altered market expectations. Frequent adjustments in trade policies increased global economic uncertainty, prompting investors to shift toward traditional safe-haven assets. Historical experience shows that during policy volatility periods, short-term gold gains typically fluctuate between 5%-10% (referencing the performance during the US-China trade friction in 2018).

Federal Reserve’s Monetary Policy Direction

The Fed’s interest rate decisions directly influence gold’s attractiveness. Since gold itself does not generate income, its value mainly depends on the cost of holding. When real interest rates (nominal rate minus inflation) decline, the opportunity cost of holding gold decreases, leading to rising gold prices.

According to CME interest rate futures data, there is an 84.7% probability of a 25 basis point rate cut at the December Federal Open Market Committee meeting. Investors can track real-time data from the FedWatch tool as an important reference for assessing medium-term gold trends.

Global Central Banks Continue Increasing Gold Reserves

The World Gold Council’s latest report indicates that, in the first three quarters of 2025, global central banks net purchased 634 tons of gold. Among these, Q3 alone saw a purchase of 220 tons, a 28% increase quarter-over-quarter. Notably, in the council’s survey, 76% of responding central banks stated they plan to increase their gold reserves over the next five years, while expecting the US dollar reserve ratio to decrease accordingly. This trend reflects profound changes in the international financial landscape.

Long-Term Support Factors Cannot Be Ignored

Beyond these three core drivers, several structural factors continue to support gold prices:

High Global Debt Levels Limit Policy Flexibility

According to IMF statistics, global debt has reached $307 trillion. Such a massive debt scale restricts central banks’ policy flexibility, leading to a tendency toward easing monetary policy, which in turn lowers real interest rates and benefits long-term gold prices.

Reassessment of the US Dollar Reserve Status

With geopolitical shifts and adjustments in international trade structures, market confidence in the US dollar has wavered. As a dollar-denominated asset, gold often benefits from increased capital inflows during periods of dollar weakness.

Persistent Geopolitical Risks

The Russia-Ukraine war continues, and tensions in the Middle East remain high. In this context, demand for precious metals as safe-haven assets remains elevated, often triggering short-term capital inflows amid market volatility.

Mainstream Financial Institutions’ Optimistic Forecasts

Despite recent fluctuations in gold prices, major international financial institutions remain bullish on gold prospects:

• J.P. Morgan’s commodities team has raised its Q4 2026 target price to $5,055 per ounce, viewing the current correction as a normal technical adjustment.
• Goldman Sachs maintains its $5,000 target price by the end of 2026.
• Bank of America has updated its target to $5,000 and suggests that breaking the $6,000 mark next year is possible.

These forecasts reflect institutional investors’ confidence in the long-term trend of gold prices.

Strategies for Different Investors

For ordinary investors, participation in the gold market should be tailored to individual circumstances:

Experienced Traders Can Capitalize on Volatility

If you have extensive trading experience, current market volatility offers good opportunities for short-term trading. High liquidity and relatively clear technical patterns facilitate timely entries and exits. It is recommended to monitor economic calendars for key data releases and seek trading opportunities around these events.

Novice Investors Should Exercise Caution

If you’re new to the market, avoid blindly chasing highs. Gold’s average annual volatility reaches 19.4%, even exceeding the S&P 500’s 14.7%. It is advisable to start with small amounts to familiarize yourself with price fluctuations before gradually increasing your position.

Long-Term Allocation May Consider Diversification

If you plan to include gold in your investment portfolio as a long-term asset, note that gold cycles tend to be longer. Looking at ten years of gold price data, although the overall trend is upward, there are significant fluctuations. Therefore, avoid concentrating all funds solely in gold; instead, diversify with stocks, bonds, and other assets to reduce overall portfolio risk.

Combine Short- and Long-Term Strategies to Maximize Returns

If you aim to benefit from long-term appreciation while capturing short-term movements, consider a “core holding + swing trading” approach. During major US economic data releases or central bank meetings, market volatility often amplifies, providing opportunities for short-term trades.

Risk Warnings and Important Reminders

Regardless of the chosen strategy, keep in mind the following points:

1. Gold’s volatility is comparable to stocks, with an average annual amplitude higher than the S&P 500.
2. Physical gold trading costs are relatively high (5%-20%), which should be factored into returns.
3. Long-term holding requires psychological readiness for medium-term corrections, with cycles possibly spanning 5-10 years.
4. Diversification is preferable to concentrated bets; avoid investing all funds in a single asset.
5. For Taiwanese investors, fluctuations in USD/TWD exchange rates also impact gold investments denominated in foreign currencies.

In summary, the gold market in 2025 is full of opportunities and risks. Whether seeking stable appreciation or short-term gains, investment decisions should be based on a clear understanding of your risk tolerance and rational analysis of market conditions—avoid blindly following the crowd.