2025 Spot Gold Market Outlook: Why Is Gold Continuing to Strengthen, and Is There Still Room for Increase in the Future?

The True Face of Gold Price Surge

Since entering the fourth quarter of 2024, the spot gold market has been turbulent. In late October, gold prices approached the historic high of $4,400 per ounce, followed by a technical correction, but this did not dampen market participants’ enthusiasm. Many traders share the same question: Will this rally continue? Is it too late to enter now?

According to Reuters data, gold gains in 2024-2025 are approaching the highest levels in nearly 30 years, even surpassing the 31% increase during the 2007 financial crisis and the 29% in 2010. Such performance is not accidental but the result of multiple market factors working together.

The Three Core Factors Driving Spot Gold Prices Higher

First factor: Market uncertainty caused by US tariff policies

After the new US government took office, tariff policies were frequently adjusted, creating high uncertainty in the global trade environment. Historical data shows that during similar policy risk periods (such as the US-China trade conflict in 2018), gold typically experiences short-term gains of 5-10%. Safe-haven funds flow heavily into the spot gold market, pushing up prices.

Second factor: Changing expectations of the Federal Reserve’s rate cut cycle

The Federal Reserve’s interest rate decisions directly impact gold’s investment appeal. When real interest rates (nominal rate minus inflation) decline, the opportunity cost of holding interest-free assets like gold decreases, attracting more capital allocation.

Interestingly, after the September FOMC meeting, gold prices fell instead because the 25 basis point rate cut was fully in line with market expectations and had been priced in advance. Powell characterized this rate cut as a “risk management tool” and did not hint at further cuts, leading the market to become cautious about future rate cut pace.

According to CME interest rate tools, the probability of the Fed cutting rates by 25 bps at the December meeting is 84.7%. Tracking data from FedWatch can serve as an important reference for predicting the trend of spot gold.

Third factor: Continued accumulation of gold reserves by global central banks

The World Gold Council (WGC) latest data shows that 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, WGC’s latest survey on central bank gold reserves found that 76% of respondents expect to “moderately or significantly increase” gold’s share in total reserves over the next five years, while most central banks anticipate a decline in dollar reserves. This reflects a renewed recognition of gold as the ultimate trust asset.

Other Important Background Factors Supporting Gold Prices

Global debt hits record highs

By 2025, global debt totals $307 trillion. The high debt environment limits the room for interest rate adjustments by countries, prompting central banks to adopt more accommodative monetary policies, which in turn suppress real interest rates and indirectly enhance the value of holding spot gold.

Confidence in the US dollar faces challenges

When the dollar faces depreciation pressure or market confidence wanes, gold priced in dollars benefits, attracting large inflows of international capital.

Geopolitical uncertainties persist

The ongoing Russia-Ukraine war, tense Middle East situations, and other events increase demand for safe-haven assets, providing long-term support for precious metals prices.

Short-term market sentiment

Continuous media coverage and social media sentiment amplification trigger large inflows of short-term speculative funds into the spot gold market, intensifying recent price increases. It is important to note that such emotion-driven rallies often come with higher volatility risks.

Institutional Forecast: Gold Price Outlook for 2025-2026

Despite recent corrections, mainstream financial institutions remain optimistic about the long-term prospects of spot gold:

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

Goldman Sachs maintains its end-2026 target of $4,900 per ounce, showing confidence in gold’s outlook.

Bank of America is more aggressive, previously setting a 2026 target of $5,000, but recent strategist updates suggest spot gold could even reach $6,000 next year.

These forecasts reflect institutional confidence in the long-term support factors for spot gold — as the world’s most trusted reserve asset, gold’s medium-term support remains intact.

Spot Gold Annual Volatility Data Comparison

Compared to other assets, spot gold’s volatility is noteworthy:

• Gold average annual volatility: 19.4%
• S&P 500 average annual volatility: 14.7%

This means gold’s price swings are comparable to or even more intense than stocks, requiring investors to be psychologically prepared.

Investment Recommendations for Different Types of Investors

For experienced short-term traders

Volatile markets offer abundant opportunities for short-term trading. Spot gold is highly liquid, and short-term price movements are relatively easier to judge, especially during periods of significant volatility, where bullish and bearish forces are clear. Experienced traders can track US economic calendars to seize trading opportunities before and after key data releases.

For novice investors

If participating in short-term trading, start with small amounts and avoid blindly increasing positions. A collapsing mindset can lead to substantial capital losses. It is recommended to learn how to use economic calendar tools to track important economic data in a timely manner.

For long-term physical gold holders

Those planning to allocate physical gold or gold assets long-term should be prepared for medium-term fluctuations. Although the long-term trend is positive, sharp swings during this period test investors’ psychological resilience.

For portfolio allocators

Including spot gold in a diversified portfolio is a reasonable choice, but over-concentration should be avoided. Given gold’s volatility is not lower than stocks, maintaining a moderate allocation—usually no more than 10-15% of the portfolio—is advisable.

For maximum return seekers

A “long-term holding + short-term trading” hybrid strategy can be adopted. Hold core positions while taking advantage of price fluctuations for short-term trades, especially during periods of increased volatility around US data releases. This requires investors to have certain technical analysis skills and risk control discipline.

Physical Gold Trading Cost Tips

When trading spot gold, note that the buy-sell spread and transaction fees for physical gold typically range from 5% to 20%. This cost should not be overlooked when calculating returns. Additionally, for investors in Taiwan, fluctuations in USD/TWD exchange rates will also affect the final converted returns.

Key Investment Takeaways

1. The long-term support logic for spot gold (central bank accumulation, low interest rate environment, geopolitical risks) remains unchanged.

2. Short-term volatility is inevitable, especially around major economic data releases and central bank meetings.

3. Gold cycles are generally measured over 10-year periods, during which prices may double or retrace 50%, requiring patience.

4. Regardless of strategy, risk management and capital management are paramount.

5. Spot gold should not be the sole component of an investment portfolio; diversification remains the prudent approach.