2025 International Gold Price Outlook: Why Precious Metals Are the First Choice for Hedging

Entering 2024-2025, global market risks are frequent, and international gold prices have once again become the focus of investors’ attention. After breaking through the historical high of $4,400 per ounce in October, there was some correction, but market enthusiasm continues to rise. The core questions facing all participants are: Does this round of gold market still have room to rise? What factors are driving gold prices higher? Is it too late to enter now?

Three Fundamental Factors Behind the New High in International Gold Prices

Gold has been steadily climbing over the past two years, especially this year when it has strongly broken through the $4,300 mark, setting a new record high. According to media statistics, the gold price increase in 2024-2025 is close to the highest level in nearly 30 years, surpassing the 31% rise in 2007 and the 29% in 2010.

Behind this rally, there are three core driving factors:

Increased Market Uncertainty Under the New U.S. Policy Direction

The new U.S. administration’s tariff policies have changed frequently, directly triggering a gold price rally in 2025. Continuous trade policy adjustments have increased market uncertainty, significantly boosting risk aversion sentiment, which in turn pushes up gold prices. From historical experience (such as during trade frictions in 2018), gold prices tend to experience short-term surges of 5-10% during periods of policy ambiguity.

Recurrent Expectations of Federal Reserve Rate Cuts

The Federal Reserve’s monetary policy direction directly affects the attractiveness of gold investments. Rate cuts tend to weaken the dollar, and the opportunity cost of holding dollar-denominated gold decreases, making gold more attractive to investors. If economic growth slows down, the magnitude and frequency of rate cuts may increase.

It is worth noting that gold prices show a clear negative correlation with real interest rates. Historical data shows that gold usually rises when interest rates fall. This is because real interest rate = nominal interest rate - inflation rate. The Fed’s rate cut decisions influence nominal interest rates, which directly change the relative value of gold. The market closely tracks changes in expectations of Fed rate cuts, and these expectation shifts are almost synchronized with gold price fluctuations.

Market data indicates that there is about an 85% chance of a 25 basis point rate cut by the Fed next time, and tracking federal funds futures can serve as an important reference for judging gold trends.

Continued Central Bank Gold Purchases Globally

Data from the World Gold Council shows that in Q3 2025, global central banks net purchased 220 tons of gold, a 28% increase quarter-on-quarter. In the first nine months, central banks accumulated about 634 tons of gold, slightly lower than the same period last year but still at a historical high.

The survey on central bank gold reserves published by the association shows that 76% of surveyed central banks plan to increase their gold holdings over the next five years, and most expect the proportion of U.S. dollar reserves to decline. This long-term trend provides solid institutional support for international gold prices.

Additional Factors Supporting the Upward Movement of International Gold Prices

Besides the main driving factors above, multiple other factors have strengthened this rally:

High Global Debt and Persistent Inflationary Pressure

By 2025, global debt has reached $307 trillion. High debt levels restrict countries’ flexibility in interest rate policies, prompting more accommodative monetary policies, which naturally lower real interest rates and further enhance gold’s relative attractiveness.

Weakening Confidence in the U.S. Dollar

When the dollar depreciates or international investors’ confidence in the dollar declines, dollar-denominated gold assets benefit from relative depreciation, attracting cross-border capital inflows.

Persistent Geopolitical Risks

International tensions increase risk aversion. Ongoing conflicts like Russia-Ukraine and complex Middle East situations continue to elevate the safe-haven demand for precious metals.

Social Media Buzz and Sentiment Transmission

Continuous media coverage and community discussions drive short-term capital inflows into the gold market, creating a self-reinforcing upward momentum.

It is important to be cautious: these factors may cause sharp short-term fluctuations and do not necessarily indicate a long-term trend. Investors should distinguish between long-term support and short-term hype.

Professional Institutions’ Outlook on International Gold Prices

Despite recent fluctuations and corrections, major global investment banks remain optimistic about gold’s long-term prospects.

J.P. Morgan Commodity Research Team considers the current correction as a “healthy correction,” and while warning of short-term risks, has raised its Q4 2026 target price to $5,055 per ounce.

Goldman Sachs maintains its optimistic outlook, reaffirming a target price of $4,900 per ounce by the end of 2026.

U.S. Bank strategists are also bullish on the precious metals market, raising their 2026 gold target price to $5,000 per ounce, and suggesting that gold prices could even surge to $6,000 next year.

Domestic well-known jewelry brands also maintain gold jewelry reference prices above 1100 RMB per gram, with no obvious decline, reflecting market recognition of gold’s long-term value.

Different Investment Approaches to Gold Allocation

After understanding the logic behind the rising international gold prices, investors should formulate strategies based on their own situations. The current rally is not over; both medium- and long-term and short-term opportunities exist, but rational participation is essential.

For experienced short-term traders

Volatile markets create good opportunities for short-term operations. Market liquidity is ample, and price direction judgment is relatively easier, especially during large fluctuations when bullish and bearish forces are clear, providing more profit opportunities. However, strong technical analysis skills are required.

For novice investors wanting to participate in short-term trading

Start with small amounts to test the waters; avoid blindly increasing positions. Once the mindset collapses, losses can quickly expand. It is recommended to learn to use economic calendar tools and track U.S. economic data releases timely as references for trading decisions.

For long-term physical gold holders

Entering at this stage requires mental preparation for possible volatility. Although the long-term bullish logic is sound, whether one can endure significant fluctuations in the middle needs to be assessed in advance.

For asset allocation investors

Gold can be moderately allocated in a diversified portfolio, but do not concentrate all funds in it. Gold’s volatility is not lower than stocks; diversification is a more prudent choice.

For investors seeking maximum returns

They can combine long-term holding with short-term trading, especially paying attention to increased price volatility around U.S. data releases. However, this requires some experience and risk management skills.

Important Risk Warnings

Before participating in international gold trading, investors need to understand the following key data:

Gold’s annual volatility is about 19.4%, higher than the S&P 500’s 14.7%, so risks should not be underestimated. Gold cycles are very long; as a store of value, a holding period of over 10 years is needed to fully realize its value, but during this period, there is also a risk of doubling or halving. Transaction costs for physical gold are relatively high, usually between 5%-20%, which can significantly erode returns.

Diversification and avoiding concentrated bets are fundamental principles for participating in the gold market. Finally, it should be emphasized that the above analysis is for reference only; any investment decision should be made based on one’s own risk tolerance.