Why has gold been rising continuously? An in-depth analysis of the gold market trend in 2025

As 2024 comes to an end, international gold prices have hit record highs. Why is this rally so fierce? To understand why gold keeps rising, we must start from the deeper logic of the market.

Fundamental Drivers Behind the Continuous Rise in Gold Prices

According to Reuters data, this round of gold price increase has approached the highest levels in nearly 30 years, with performance in 2024-2025 surpassing 2007’s 31% and 2010’s 29%. This is not a coincidence but the result of multiple factors resonating together.

Policy Uncertainty Boosts Safe-Haven Demand

Frequent adjustments in tariff policies have become the most direct catalyst. When the market faces policy variables, funds tend to flow into traditional safe-haven assets like gold. Historical experience shows that during similar policy conflicts (such as the US-China trade war in 2018), gold prices typically increase by 5-10% in the short term. Market risk aversion heats up, and gold’s appeal as a “trust deficit asset” strengthens accordingly.

Real Interest Rate Decline Logic

To understand why gold continues to rise, we must focus on the key variable of interest rates. Central bank rate cuts directly affect the attractiveness of the US dollar—lower interest rates mean lower opportunity costs for holding gold, pushing up gold prices. According to CME interest rate tools, the probability of a 25 basis point rate cut next time is 84.7%.

Real interest rates (= nominal interest rate - inflation rate) show a clear negative correlation with gold prices. When the Federal Reserve signals a rate cut, gold prices often rise accordingly; conversely, if the rate cut is fully priced in and anticipated early, gold prices may even retreat in the short term. This also explains why gold price fluctuations closely follow Federal Reserve decisions.

Central Bank Purchases Drive Long-Term Demand

Global central bank demand for gold remains strong. According to the World Gold Council report, in Q3 2025, net gold purchases by central banks reached 220 tons, a 28% increase from the previous quarter. In the first nine months, total gold purchases amounted to about 634 tons, still well above the historical average.

More notably, 76% of surveyed central banks believe they should increase their gold reserves over the next five years, while most expect the US dollar reserve ratio to decline. This reflects a structural shift in global reserve asset allocation, providing long-term support for gold.

Other Contributing Factors

Global debt expansion and easing monetary policy expectations
By 2025, global debt totals $307 trillion. High debt environments limit countries’ room to raise interest rates, forcing policies toward easing, which in turn depresses real interest rates and benefits gold.

Weakening confidence in the US dollar
When the dollar depreciates or market confidence in the dollar wanes, gold priced in USD benefits, attracting capital inflows.

Geopolitical conflicts
Uncertainty events like the Russia-Ukraine war and Middle East tensions continue to boost safe-haven demand for precious metals, supporting gold prices.

Media and capital resonance
Continuous media coverage and social sentiment spreading lead to short-term capital inflows, intensifying the upward movement.

Institutional Outlook for 2026 and Beyond

Despite recent volatility, mainstream investment banks remain optimistic about gold’s prospects. JPMorgan’s commodities team considers this correction a “healthy pullback” and has raised its Q4 2026 target price to $5,055 per ounce. Goldman Sachs maintains a $4,900 per ounce target for the end of 2026, while Bank of America further predicts gold could challenge the $6,000 mark next year. Retail references also support this view—well-known jewelers like Chow Tai Fook and Luk Fook Jewelry still keep their pure gold jewelry prices above 1100 yuan/gram.

Practical Advice for Retail Investors

After understanding why gold keeps rising, investment decisions should vary by individual:

Short-term traders can seize volatility opportunities. Liquidity is ample, and the logic of price movements is relatively clear. However, beginners should start with small amounts to test the waters, avoiding blindly increasing positions to prevent psychological stress. Use economic calendars to track US data releases to assist trading decisions.

Long-term holders should be psychologically prepared for volatility—gold’s annual amplitude is 19.4%, not lower than stocks at 14.7%. Investment cycles should be over 10 years to achieve preservation and appreciation, but during this period, prices may double or halve. Physical gold trading costs range from 5-20%, so careful evaluation is necessary.

Portfolio allocation should be diversified. Gold should not be the core of all assets but a risk hedge. Consider combining long-term holding with short-term swing trading, especially when volatility amplifies around US market data releases. However, this requires certain risk control capabilities.

Key reminder: Gold’s volatility risk should not be underestimated. During policy changes and economic data releases, sharp fluctuations are especially likely. Entering the market at this stage requires clear risk awareness—avoid blindly chasing gains without careful consideration.