Gold Price Trend Analysis After 2022: How Central Bank Purchases and Geopolitical Risks Drive Gold Prices

In October 2024, international spot gold XAUUSD broke through $4,400 per ounce, setting a new historical high. However, the subsequent pullback has left many investors feeling confused—is this a signal for correction or a buying opportunity? To determine the future direction of gold prices, it is essential to understand the three core logics driving gold’s rise.

Central Bank Frenzy in Gold Accumulation: Why Gold Reserves Have Become a New Battleground for Major Powers

Over the past two years, global central banks have significantly increased their appetite for gold. According to the World Gold Council (WGC), net gold purchases by central banks worldwide reached 634 tons in the first three quarters of 2025, with 220 tons bought in the third quarter alone, a 28% quarter-over-quarter increase. What does this number reflect?

Central banks are rebalancing their reserve assets. A mid-year survey by the WGC shows that 76% of surveyed central banks plan to increase their gold proportion over the next five years, while also expecting a decline in US dollar reserves. This is not just a simple asset allocation change but a reallocation of confidence in the global monetary system. The status of gold as the “ultimate credit” is being reinforced at the central bank level.

In a high-debt environment, gold held by central banks becomes even more strategically valuable. The total global debt has approached $307 trillion (IMF data). Countries are forced to maintain loose monetary policies to cope with debt pressures, indirectly lowering real interest rates and increasing gold’s attractiveness relative to fiat currencies.

Policy Uncertainty and Dollar Depreciation: The Two Major Drivers of Gold Price Trends

At the start of 2025, a series of tariff policies reignited market risk aversion. Whenever policy uncertainty exists, gold tends to become a safe haven for capital. Historical experience (during the US-China trade war in 2018) shows that in similar environments, gold prices typically rise 5-10% in the short term.

Expectations of Federal Reserve rate cuts also have a profound impact on gold prices. Rate cuts → weaker dollar → gold priced in USD appreciates, a logic repeatedly validated by the market. The XAUUSD price shows a clear negative correlation with real interest rates: when rates fall, gold rises.

The pullback after the September FOMC meeting exemplifies this logic. A 25 basis point rate cut was fully in line with market expectations, and the narrative of “risk management rate cuts” dispelled hopes of continuous easing, leading to short-term profit-taking. According to CME rate tools, the probability of the Fed cutting rates by another 25 bps in December remains high at 84.7%, providing support for subsequent gold prices.

Institutional Forecasts and Market Consensus: How Do Price Analysts View Gold Trends?

Despite recent volatility, major investment banks remain optimistic about gold’s outlook. JPMorgan’s commodities team raised their Q4 2026 target to $5,055, considering this correction a “healthy adjustment.” Goldman Sachs maintains a target of $4,900 by the end of 2026. Bank of America strategists are more aggressive, even expecting gold to potentially surge past $6,000.

The underlying logic behind these forecasts is consistent: the long-term fundamentals supporting gold have not diminished. Central banks continue to add holdings, geopolitical risks persist, and real interest rates remain low—all reasons for medium- to long-term bullishness.

What Should Retail Investors Do: Strategies for Different Risk Preferences

For short-term traders, volatility itself presents opportunities. Gold’s average annual amplitude is 19.4%, higher than the S&P 500’s 14.7%. Ample liquidity and clear technical signals make short-term trading relatively manageable. Especially around US economic data releases, volatility often amplifies, providing distinct long and short opportunities. However, a mature risk management system is essential; avoid blindly chasing highs.

For novice investors, do not follow the market blindly during hype. Rapid fluctuations in gold are most likely to lead to buying at highs and selling at lows, which can severely damage your capital. It is recommended to start with small amounts, familiarize yourself with economic calendar tools, learn to track US economic data, and gradually increase positions.

For long-term holders, entering now requires psychological readiness to endure significant volatility. Over a decade, gold can preserve and increase value, but it may double or halve in the process. Transaction costs for physical gold (5%-20%) are also significant and make frequent trading unadvisable.

For portfolio allocators, gold can diversify risk but should not be a full bet. It is advisable to keep gold as a rational proportion within the overall portfolio, combined with stocks, bonds, and other assets to achieve true diversification. For maximizing returns, one can hold long-term positions while leveraging short-term price movements—though this requires experience and market sensitivity.

A few risk reminders: Gold cycles are long; short-term fluctuations can be repeated; physical gold has high transaction costs and is unsuitable for frequent trading; and foreign-denominated gold prices also involve exchange rate risks (USD/TWD fluctuations can impact final returns).

Conclusion: A Rational Attitude Toward Gold Price Trends

Gold’s rise is not a fleeting phenomenon but the result of multiple forces working together. Central bank strategic allocations, policy uncertainties, shaken dollar confidence, and geopolitical risks all support the gold price. Breaking through $4,400 is just the beginning, with institutional targets exceeding $5,000.

However, regardless of how attractive the targets are, the foundation of investing always lies in understanding your own risk tolerance. Choose suitable trading strategies, set reasonable stop-loss and take-profit levels, and avoid being swayed by short-term volatility—that is the key to long-term profitability in the gold market.