2025 International Gold Price Outlook: Gold Price Trends Based on Market Drivers

Over the past year, the global financial markets have experienced significant volatility, and international gold prices have become a key focus for investors. After breaking the all-time high of $4,400 per ounce, the market experienced a technical correction, but risk aversion remains high. Many participants are beginning to consider a common question: Will this gold rally continue? Is it too late to enter now? How can we understand the logic behind gold price fluctuations?

To answer these questions, we need to analyze the fundamental factors driving the XAU/USD increase. Only by understanding the intrinsic market dynamics can we make more rational investment decisions.

The Strongest Rally in Nearly 30 Years: Why Are International Gold Prices So Strong?

According to Reuters, the gold price for 2024-2025 has already approached the highest peak in nearly 30 years, surpassing the 31% increase in 2007 and the 29% growth in 2010. Behind these figures reflects the result of multiple factors stacking up in the global market.

The core drivers of gold’s continued rise mainly come from three levels:

First Level: Market Uncertainty Caused by Trade Policy Changes

With a new government in office, a series of trade policy adjustments have followed, leading market participants to have significant expectations about future economic directions. Historical cases (such as during the US-China trade tensions in 2018) show that in an environment of policy ambiguity, safe-haven funds tend to flow into gold, pushing prices up by 5-10% in the short term. The current policy environment is a realistic reflection of this scenario.

Second Level: Changing Expectations of Federal Reserve Interest Rate Policies

There is a clear inverse relationship between the Fed’s rate cuts and gold performance. When interest rates decline, the opportunity cost of holding gold decreases, making gold relatively more attractive. According to CME FedWatch data, the probability of a 25 basis point rate cut in December is 84.7%.

It’s important to note that the impact mechanism of interest rates on gold prices is: Real interest rate = Nominal interest rate - Inflation rate. Federal Reserve decisions directly influence nominal interest rates, which in turn change real interest rates, ultimately affecting gold’s allocation value. That’s why we often see XAU/USD’s price movements closely follow Fed policy expectations.

Third Level: Adjustment in Global Central Bank Reserves

According to the World Gold Council, net gold purchases by central banks reached 220 tons in the first three quarters of 2025, a 28% increase quarter-over-quarter. As of September, central banks had accumulated about 634 tons of gold, slightly lower than the same period last year but still well above levels in other historical periods.

More notably, in the central bank reserve survey published by the World Gold Council, 76% of respondents plan to increase their gold reserves over the next five years, while most expect the dollar reserve ratio to decline. This indicates a deep structural adjustment in international reserve composition.

Composite Factors: A Panoramic Understanding of Gold Price Background

Besides the three core factors above, several auxiliary factors are jointly pushing up gold prices:

High Global Debt and Limited Monetary Policy Space

According to IMF data, global debt reached $307 trillion by 2025. High debt levels restrict countries’ flexibility in adjusting interest rates, leading to a tendency toward easing policies, which lowers real interest rates and indirectly boosts gold demand.

Eroding Confidence in the US Dollar

When the dollar faces depreciation pressure or market confidence wanes, dollar-denominated gold assets tend to benefit, attracting cross-border capital inflows.

Rising Geopolitical Risks

Evolving Russia-Ukraine tensions, Middle East conflicts, and other events increase investors’ demand for safe-haven assets.

Information Dissemination and Sentiment Resonance

Continuous news reports and social media sentiment amplification catalyze irrational short-term capital inflows, creating a self-reinforcing upward momentum.

It’s worth noting that these short-term catalysts may cause sharp fluctuations but do not necessarily indicate a long-term trend. For Taiwanese investors, USD/TWD exchange rate fluctuations will also impact the final returns of gold investments.

Institutional Outlook: Gold Price Forecasts for 2026

Despite recent corrections, many international financial institutions remain optimistic about the long-term outlook:

J.P. Morgan Commodity Research Team characterizes this correction as a “reasonable price correction,” and after assessing short-term risks, raised the Q4 2026 target price to $5,055 per ounce.

Goldman Sachs analysts maintain their previous outlook, reaffirming a gold price target of $4,900 per ounce by the end of 2026.

Bank of America’s strategy department shows a more aggressive stance, raising the 2026 target to $5,000 per ounce, with the latest view suggesting gold could even break through $6,000.

Major jewelry chains such as Chow Tai Fook, Luk Fook, and Chow Sang Sang still quote pure gold jewelry prices above NT$1,100 per gram, with no obvious correction. These signs indicate market participants’ recognition of gold’s medium- to long-term value.

Practical Guide for Retail Investors

After understanding the market logic, the next question is: Is there still an opportunity to participate now?

The answer is yes, but the approach varies by individual:

For experienced short-term traders

The volatile market environment creates opportunities for short-term trading. During high liquidity periods, price directions are easier to judge, especially during sharp rises or falls, where the battle between bulls and bears is clear. Experienced traders can increase profits by capturing oscillation cycles.

For beginners entering the market

Start with small positions and avoid blindly adding. A collapsing mindset can lead to rapid losses. Use economic calendar tools to track US economic data releases to assist trading decisions.

For long-term allocators

If planning to buy physical gold as a long-term asset, be prepared for significant fluctuations. While the medium- to long-term bullish logic is sound, large price swings may occur along the way, so assess your risk tolerance in advance.

For portfolio managers

Including gold in a portfolio is feasible, but note that gold’s volatility (annual average amplitude of 19.4%) is not lower than the S&P 500 (annual average amplitude of 14.7%). Over-concentration in a single asset is risky; diversification offers more stability.

For aggressive yield maximizers

You can attempt rolling trades based on long-term holdings, especially around US market data releases, where volatility tends to intensify. This requires considerable trading experience and risk management skills.

Final Risk Reminder

Investing in gold requires attention to several key points:

Gold cycles are very long—over a decade, there is potential for appreciation, but intermediate periods may see doubling or halving, so psychological resilience is crucial.

Physical gold trading costs are relatively high—generally between 5% and 20%, which directly eats into returns.

Diversification principles are vital—no matter how optimistic you are about an asset, concentrated holdings are high risk.

While the logic behind international gold price increases remains valid, participation should be based on your risk appetite and trading skills. Blind following often leads to losses; rational decision-making is the foundation of long-term profitability.