The gold market in 2025 has played out a classic risk-averse asset feast — with an annual increase of 64.4%, setting the highest yearly record since 1979. This rally has attracted continuous inflows into gold ETFs, with investor participation at an unprecedented level.

Entering a new phase, the logic behind gold's rise and fall has become more complex. The sudden incident over the weekend between the US and Venezuela directly boosted risk aversion sentiment. During the early trading hours, gold prices responded with nearly a 1% increase, reaching a high of $4,372. Geopolitical conflicts are often catalysts for pushing gold higher, and the rapid response of risk-averse funds clearly indicates the market’s focus on uncertainty.

At the same time, the US dollar index is also climbing, recently hitting a two-week high. This has put pressure on gold’s rally, and the tug-of-war between bulls and bears is beginning to emerge.

From a longer-term perspective, the foundation for gold’s rise remains solid. The over 60% annual increase has just concluded, and both retail and institutional investors in the market are generally bullish, with some even calling for a target of $5,000. The Federal Reserve’s rate-cut cycle still holds uncertainties, and global central banks continue to increase their gold reserves. These factors all provide underlying support for gold prices.

However, the core determinants of the current market trend depend on two key signals: First, whether international geopolitical risks will further escalate or ease, which will directly impact risk aversion demand; second, whether the US dollar can continue to maintain its strength, as dollar appreciation often exerts pressure on gold priced in dollars. The tug-of-war between these two forces will determine the next direction of gold’s performance.