## The 2025 Gold Investment Puzzle: To Jump In or Wait? The Real Considerations After Gold Prices Hit a 30-Year High

**What is happening in the gold market in 2025?**

Entering 2025, gold prices continue to reach new highs. After breaking through $4,300 per ounce in October, the gains have approached the highest levels in nearly 30 years, surpassing 31% in 2007 and 29% in 2010. What is the logic behind this rally? For ordinary investors, is there still an opportunity to get involved?

### Why Is Gold Continuing to Rise? An In-Depth Analysis of the Three Main Drivers

**Expansion of US Policy Uncertainty**

Since Trump took office, a series of tariff policies have been introduced, directly fueling market risk aversion. Historical experience shows that during periods of policy uncertainty (such as the US-China trade war in 2018), gold typically experiences short-term gains of 5-10%. When facing policy variables, markets naturally tend to seek refuge in traditional safe-haven assets like gold.

**Significance of the Federal Reserve’s Policy Signals**

The Federal Reserve’s interest rate decisions have a clear negative correlation with gold prices—lower interest rates make gold more attractive. This is because real interest rates (nominal interest rate minus inflation) determine the opportunity cost of holding gold. According to CME interest rate tools, the probability of a 25 basis point rate cut by the Fed in the next move has reached 84.7%. After the September FOMC meeting, gold prices retreated, mainly because the market had fully priced in the rate cut, and Powell’s lack of hints about future easing led investors to adopt a wait-and-see attitude.

**Shift in Global Central Bank Reserves**

Data from the World Gold Council shows that in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-over-quarter. More notably, in the central bank gold reserve survey released in June, 76% of respondents indicated they plan to increase gold holdings over the next five years, while most expect the proportion of US dollar reserves to decline. This indicates a continued warming of demand for gold at the central bank level.

### Long-term Support Factors: Why Gold Prices Won’t Easily Turn Back

In addition to the short-term drivers above, several medium- and long-term factors continue to support gold:

**Global High Debt Environment and Policy Dilemmas**

By 2025, global debt has reached $307 trillion. High debt levels limit the flexibility of monetary policies worldwide, with easing becoming the main tone, which directly lowers real interest rates and indirectly boosts gold’s relative value.

**Eroding Confidence in US Dollar Reserves**

When the dollar is under pressure or market confidence in the dollar wanes, gold priced in USD tends to attract capital inflows. In a weakening dollar environment, gold is more likely to draw global investors’ funds.

**Persistent Geopolitical Risks**

The Russia-Ukraine situation remains unresolved, and conflicts in the Middle East persist. These uncertainties continue to boost safe-haven demand for precious metals, often causing short-term volatility.

**Market-Driven Positive Feedback**

Intensive media coverage and emotional hype on social media lead to large short-term capital inflows into gold, creating a continuous upward trend. However, it’s important to note that such short-term factors can trigger sharp fluctuations and do not necessarily indicate a long-term trend continuation.

### Institutional Forecasts: Can Gold’s Gains Continue into Next Year?

Despite recent fluctuations and adjustments, major international institutions remain optimistic about the medium- and long-term trend:

**J.P. Morgan’s commodities team** considers the recent correction a “healthy adjustment” and has raised its Q4 2026 target price to $5,055 per ounce.

**Goldman Sachs** reaffirms its end-2026 target of $4,900 per ounce, maintaining confidence in gold’s prospects.

**Bank of America** is more aggressive, previously raising its 2026 target to $5,000 per ounce, and recent strategists suggest gold could even challenge $6,000 next year.

**Market reality** is reflected in jewelry retail prices—well-known brands like Chow Tai Fook, Luk Fook, Chow Sang Sang, and Chow Tai Seng still quote pure gold jewelry at over 1,100 RMB per gram, with no obvious decline.

### Different Investors’ Decision Frameworks

**For Short-term Traders**

If you have some market experience, the current volatility offers good trading opportunities. XAUUSD liquidity is ample, and short-term price directions are relatively easier to judge, especially during sharp rises or falls, where bullish or bearish momentum is clear. But beginners must remember: start with small amounts, test the waters, and gradually increase positions. Never blindly add to positions; a shattered mindset can lead to significant losses. Learning to use economic calendars to track US economic data releases will greatly assist your trading decisions.

**For Long-term Holders**

If you plan to buy physical gold for the long term, be mentally prepared for significant fluctuations. Gold’s annual volatility averages 19.4%, not lower than the stock market’s (S&P 500 average 14.7%). Gold’s cycle is very long—value may appreciate over ten years, but during that period, it could double or halve. Additionally, transaction costs for physical gold are relatively high, generally between 5% and 20%.

**For Portfolio Allocators**

Including gold in your investment portfolio is undoubtedly wise, but never allocate all your assets to it. Gold’s volatility is comparable to stocks; diversification is a safer approach. If you want to maximize returns, you can hold long-term while exploiting short-term fluctuations around US market data releases for tactical trading, but this requires experience and risk management skills.

### Pre-Investment Must-Read Reminders

Gold is not a passive asset—its annual volatility approaches 20%, meaning risks of fluctuation are real. Gold’s investment cycle is very long; ten years is a reasonable observation period, but it may experience intense volatility in the meantime. Transaction costs for physical gold are high; beware of costs eroding your returns. Whatever your strategy, remember: don’t put all your eggs in one basket.

The current gold rally is not over. For experienced investors, both medium- and short-term opportunities exist. The key is to make decisions based on your risk tolerance and market understanding, rather than blindly following the crowd.