Why did gold jump to its highest levels in 2025? Gold analyses and price forecasts

Introduction: The Exceptional Year for the Precious Metal

Gold has always been considered a safe haven for investors during times of economic and political turmoil. But what happened in 2025 was truly extraordinary. Since the beginning of this year, gold prices have increased by over 47%, making it outperform most other global financial assets. This strong performance has not been seen in the market perhaps for more than half a century.

To understand this remarkable rise, we need to look at a set of interconnected factors that moved in parallel to push the yellow metal’s prices higher.

Key Economic Factors Behind the Rise

Ongoing Global Inflation

The International Monetary Fund warns that global inflation could reach 4.2% in 2025, well above the historical average of 2-3%. This inflationary pressure encourages investors to hold gold as a safeguard for their wealth.

US trade tensions, especially tariffs imposed by US authorities on imports, have significantly contributed to inflation expectations. Fears of supply chain bottlenecks worldwide, particularly in the Red Sea, have further deepened these expectations.

US Interest Rate Policy

The US Federal Reserve began steps to cut interest rates after weak readings from the labor market and industrial sector. On September 17, the Fed lowered the interest rate from 4.5% to 4.25%. In the same month, gold prices rose by approximately 22.9%.

This rate cut makes gold more attractive to investors, as precious metals do not generate interest, but lower rates reduce the opportunity cost of holding them.

Geopolitical and Military Events

Escalation in the Middle East

Repeated military clashes between Israel and Iran have raised concerns about the safety of global shipping routes, especially the Strait of Hormuz and the Red Sea. These fears prompted investors to seek safe assets.

On June 13, events escalated with mutual military strikes, adding upward pressure on gold prices.

US Government Crisis

The failure to agree on extending the Continuing Resolution led to a partial government shutdown starting September 30, continuing into October. This shutdown created uncertainty around US economic data and macroeconomic performance, increasing gold’s appeal as a safe asset.

Russian-Ukrainian War and US-China Tensions

The ongoing conflict in Europe and the escalation of trade tensions between America and China (with threats of an additional 100% tariff) added another layer of uncertainty to global markets.

Role of Institutions and Central Banks

Massive Institutional Demand

According to the World Gold Council report, gold trading volumes reached $329 billion daily, a record level.

Central banks around the world continued their policy of buying gold as part of their international reserves. Gold ETF holdings increased by 41% to reach $383 billion.

This strong demand from major financial institutions reflects the same concerns felt by individual investors about economic and geopolitical disruptions.

Technical Analysis of Gold

Resistance and Support Levels

Gold has been moving in a strong upward trend since mid-2024. It managed to break through strong resistance levels at $3700 and $3800.

Current key levels:

• Resistance at $4050 (upper Bollinger Band)
• A strong psychological resistance at $4000
• Sequential support levels at $3900, then $3819, then $3700

Momentum Indicators

The MACD indicator still shows positive signals as the MACD line remains above the signal line. However, the histogram has started to show signs of slowing down, which may indicate upcoming weakening buying momentum and a correction.

Expected Scenarios for the Coming Months

Scenario One: Relative Stability

If economic and geopolitical conditions remain relatively stable, with inflation around 4-6%, and the Fed cuts rates moderately, gold may move within the $3500-3600 range, achieving an annual return of about 34%.

Scenario Two: Ignition (Most Likely)

This scenario assumes stagflation (economic slowdown with rising inflation), continued US government shutdown, and escalation of geopolitical tensions.

In its most extreme form, gold could reach $4400 by the end of 2025. In its more moderate form, the year could close around $4100 (56% annual return).

Closest Technical Forecasts

Main Scenario: A technical correction in October toward $3820-3900, then a gradual return to upward movement in November and December toward $4100-4200.

Alternative Scenario: A deeper correction to $3700 if the $3820 level is broken, but the overall trend remains bullish with slower momentum.

Investment Strategies in Gold

Long-term Investment

Aiming to benefit from the long-term rise of gold, where the investor buys a specific amount and holds it for a year or more. The goal is hedging against inflation and preserving savings.

Central banks and major financial institutions are the main players in this type of investment.

Short-term Investment

Involves buying and selling gold multiple times within less than a year, benefiting from daily fluctuations. This requires mastery of technical and fundamental analysis tools to identify entry and exit points efficiently.

Alternative Investment Methods

Instead of physically owning gold, investors can:

• Invest in gold exchange-traded funds
• Buy shares of mining companies
• Trade via contracts for difference (with attention to the high risks involved)

Tips for Diversifying the Investment Portfolio

Investment experts recommend that gold should constitute at least 15-20% of the investment portfolio. This percentage provides sufficient protection against sudden economic shocks and sharp market volatility.

Summary

The gold market in 2025 is experiencing extraordinary activity driven by a complex mix of inflationary pressures, geopolitical uncertainty, and US interest rate policies. There is a strong likelihood that gold prices will stabilize around $4100 by the end of the last quarter of the year.

To capitalize on these opportunities successfully, investors should develop a deep understanding of technical and fundamental gold analyses, and adhere to a clear strategy that matches their time horizon and risk tolerance.