Is it still worth buying gold after breaking through $4,200? Analyzing market dynamics to identify the investment opportunity

The recent surge in gold prices started in October 2023, reaching $2,700 in October 2024, and breaking through the $4,200 mark by October 2025. According to survey data from Reuters with analysts, the average price for the full year of 2025 is expected to be around $3,400, and it may reach an average of $4,275 in 2026.

At such high levels, many investors are asking: Is it still worth buying gold now?

Why has gold been hitting new highs?

The first driver: Global trust crisis

Since 2020, the US has implemented unlimited quantitative easing to solve liquidity issues, passing inflationary pressure to the world. By 2022, it rapidly raised interest rates to combat domestic inflation. This “mutual counterbalance” operation led to a significant devaluation of the dollar and US bonds, causing global trust in traditional fiat currencies to plummet.

When cash and bonds lose appeal, investors turn to gold and other alternative assets. This is the fundamental reason for the increased demand for gold.

The second driver: Competition from alternative assets

Gold is no longer the only safe-haven choice. Bitcoin has broken through the $100,000 historical high, attracting substantial capital in the cryptocurrency market. Meanwhile, the bond market is also vying for funds due to expectations of interest rate cuts.

This “tripartite” situation means that the flow of funds to gold faces diversion, but the increased demand is enough to offset this pressure. The key is how different assets are redistributed.

The third driver: Major adjustments in the financial system

International financial regulations—the Basel Accords—have been revised. Previously, gold was classified as Tier 3 capital, considered to have poor liquidity. Now, it has been redefined as Tier 1 capital, on equal footing with government bonds and cash.

This has a huge impact on the banking system. Compared to the continuously printed cash, gold’s scarcity and mining costs are increasing every year, making it a more potent store of value. Therefore, banks are beginning to buy large amounts of gold.

Is it worth entering now? From fundamental and technical perspectives

Fundamental analysis: Long-term upward trend, short-term caution

From the macro environment, as long as the following factors persist, the upward trend of gold will continue:

• The trust crisis in the US dollar remains unresolved
• Geopolitical risks still exist
• Global central banks are actively allocating gold

But we also need to recognize the pressures gold faces:

• Cryptocurrencies are increasingly attracting safe-haven funds
• The easing cycle boosts bond attractiveness
• The high price level increases the risk of chasing the market

The forecast is: gold will continue to rise, but the growth rate may slow, and volatility could increase.

Technical analysis: Waiting for a pullback is the best strategy

From a technical standpoint, gold prices are still in an upward channel. Using Bollinger Bands, we can see that gold fluctuates within the Bollinger range, with the lower band being an ideal entry point.

This means the smartest approach is not to chase the high but to wait for the price to pull back near the lower Bollinger Band to enter. This allows for lower-cost participation and better future gains.

Comparing gold and Bitcoin: Bitcoin has larger gains but also higher volatility, while gold is relatively stable with more moderate growth. Looking at the price trends of US stocks, US bonds, and gold, gold is already at a relatively high level, whereas US bonds at the low point are more attractive.

Who should invest in gold?

Participants in gold investment are quite broad:

Central banks: Gold can hedge against inflation and serve as strategic reserves. Historically, central banks have favored gold.

Institutional investors: Gold’s low correlation with other assets helps smooth portfolio value fluctuations, making it a standard risk management tool.

Individual investors: Gold offers safe-haven and inflation-hedging functions. Appropriately allocating part of assets to gold is beneficial for long-term asset appreciation.

The conclusion is: different investors are suitable for gold investment, but their purposes and holding periods differ, so they should choose the most suitable investment tools.

How to buy gold at the lowest cost?

Physical gold (not recommended for individuals)

The buy-sell spreads for gold bars and jewelry vary greatly, liquidity is poor, storage costs are high, and it’s not suitable for individual investment. This method is mainly used by central banks and large institutions.

Gold futures and options (high threshold)

These financial derivatives have good liquidity and small spreads, but the issues are high account opening thresholds, high margin requirements, and low capital efficiency. The nonlinear payoff structure of options makes it difficult for ordinary investors to profit and is not very suitable for non-professionals.

CFD contracts (low cost and high efficiency)

CFD is a contract linked to physical gold (London Gold). Investors can trade based on gold price movements without actually holding gold.

Advantages of CFDs include:

• No need for frequent rollovers like futures
• No complexity like options
• Accessible globally
• Supports different leverage levels (usually 1:50 to 1:200)
• Small spreads and good liquidity
• Ability to set stop-loss and take-profit orders

Compared to the other two methods, CFDs offer the best liquidity, cost efficiency, and convenience for ordinary investors.

Summary of gold investment costs

Best strategies for gold investment

Step 1: Confirm your investment goals and risk tolerance. Are you aiming for long-term preservation or short-term trading?

Step 2: Choose the appropriate investment tool. For most investors, CFD contracts are recommended due to their low cost and ease of use.

Step 3: Seize the entry timing. Avoid blindly chasing highs; instead, enter when gold prices pull back to the lower Bollinger Band, which allows for better cost and return.

Step 4: Set risk controls. Always establish stop-loss points to prevent large losses in extreme market conditions, and set take-profit points to lock in gains timely.

Final words

Gold remains an important asset for coping with market uncertainties. Unless the US enforces through political means that central banks hold a specific proportion of US bonds, based on the current economic landscape, as long as gold prices pull back to the lower Bollinger Band, it is an ideal entry point for long-term investors.

Whether it is worth buying gold now depends on whether the fundamentals have changed. As long as the trust crisis, geopolitical risks, and central bank gold allocations persist, the long-term investment value of gold remains. The current high prices serve as a reminder to be more cautious in choosing entry points rather than abandoning this asset class.