How will gold prices trend in 2025? A comprehensive analysis from central bank gold reserves to exchange rate fluctuations

Between 2024 and 2025, the global markets are volatile once again, and gold has become the focus of investors’ attention. After breaking the historical high of $4,400 per ounce in October, although a technical correction occurred, buying momentum remains strong. Many investors are pondering: Is there still room for gold to rise? Is it too late to enter now?

To understand the price trend of gold, we must first grasp the core factors driving this rally.

Are central bank gold purchases a long-term support or short-term speculation?

According to the latest 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, total gold purchases reached approximately 634 tons, slightly below the same period last year but still well above historical averages.

More notably, 76% of surveyed central banks indicated they plan to “moderately or significantly increase” their gold holdings over the next five years, while most expect the proportion of US dollar reserves to decline. This reflects a deeper trend: a subtle adjustment in global currency reserve structures.

How do Fed rate cut expectations influence gold price trends?

Gold has a clear negative correlation with real interest rates—when rates fall, gold’s attractiveness rises. This is because the opportunity cost of holding gold decreases as interest rates decline.

Based on CME interest rate futures data, there is an 84.7% probability that the Federal Reserve will cut interest rates by 25 basis points at the December meeting. Whenever the Fed signals easing, gold prices tend to rise accordingly. However, it’s worth noting that after the September FOMC meeting, gold prices actually fell because Powell characterized the rate cut as a “risk management” measure rather than the start of sustained easing, leading to market fluctuations in expectations for subsequent rate cuts.

Uncertainty in trade policies boosts risk aversion sentiment

Since Trump took office, tariffs policies have been continuously introduced, directly fueling market concerns about economic prospects. Historical experience shows that during periods of policy uncertainty, such as the US-China trade war in 2018, gold prices often saw short-term gains of 5-10%.

Currently, global debt has reached $307 trillion (IMF data), and high debt levels limit the policy flexibility of central banks worldwide. Loose monetary policies tend to lower real interest rates, providing long-term support for gold prices.

Confidence in the US dollar wavers amid geopolitical risks

In addition to macro factors, the weakening of the US dollar also reinforces gold’s status as a safe-haven asset. Ongoing conflicts like the Russia-Ukraine war and tensions in the Middle East continually boost market demand for precious metals as a hedge, often causing short-term volatility. Moreover, continuous media coverage and social media reports attract large retail capital inflows, further pushing up gold prices.

Mainstream institutions’ forecasts for gold trends

Despite recent volatility, industry outlooks remain optimistic for the medium to long term:

• JPMorgan: Views the correction as a “healthy adjustment,” raising the Q4 2026 target price to $5,055 per ounce
• Goldman Sachs: Reaffirms the 2026 year-end target of $4,900
• Bank of America: Previously raised the 2026 target to $5,000, with strategists suggesting next year could even see a surge to $6,000

Jewelry brands’ gold jewelry prices still stay above 1100 yuan/gram, showing no significant decline, reflecting continued market confidence in gold.

Investment strategies for different investors

Experienced short-term traders: Volatile markets offer many trading opportunities, with ample liquidity and relatively clear logic for rises and falls. Keeping track of economic calendars and US data releases can significantly improve success rates.

Novice investors: Avoid chasing highs blindly. Start with small amounts to test the waters and experience the volatility of gold. The annual average fluctuation amplitude of gold is 19.4%, higher than the S&P 500’s 14.7%.

Long-term holders: Prepare psychologically for significant intermediate fluctuations. Physical gold transactions incur costs of 5-20%, which should be carefully considered.

Portfolio allocation perspective: Gold can indeed diversify investment risks but should not dominate the portfolio. Maintain a balanced mix with other assets.

Combining long-term and short-term strategies: On the basis of long-term holdings, leverage short-term trading during volatile periods around US market data releases, but only if you have sufficient risk control skills and market experience.

Overall, the upward trend of gold prices has not truly loosened—central banks continue to increase holdings, rate cut expectations remain strong, dollar confidence wanes, and geopolitical risks persist. But investors must recognize one key point: gold cycles are very long. Over a 10-year horizon, it can preserve and increase value, yet in the short term, it may double or halve. Taking profits when appropriate, diversifying, and operating rationally are the correct approaches to navigating volatility.