Analysis of Future Gold Price Trends: What Will the Gold Price Be in 2025?

Fundamental analysis of gold and trading strategy

The Federal Reserve Board (FRB) announced its latest interest rate decision, resulting in a 0.25% rate cut in September, which led to a 0.83% drop in gold prices at the close of trading. How are future gold prices expected to be forecasted?

In 2025, gold prices continued to rise, repeatedly hitting new all-time highs, and major institutions raised their target prices for gold one after another. After the Fed's announcement of a 0.25% interest rate cut in September, gold prices surged before falling, ending the day down 0.83%. Many investors are confused about whether future gold prices will adjust further or hit new highs again, leading to questions like, "Is it too late to enter now?" "Should I invest more during the decline?" "I already hold a lot of gold, but should I realize my profits?"

Regardless of how you decide on the next steps, it is important to understand the fundamental causes of recent fluctuations in the gold market. This way, you can respond calmly to any changes in future gold prices. Below, we will sequentially answer your questions regarding this gold market situation:

• Fundamental reasons for gold price fluctuations: Why did the gold price surge?
• Why did gold prices drop after the FOMC meeting?
• What will be the future trend of gold prices, will they rise further?
• Is it too late to enter now?

Why did XAU/USD rise significantly?

Ahead of the FOMC meeting, gold prices continued to rise, strongly breaking through the previous record high of $3,600. The rate of increase in gold prices from 2024 to 2025 is the highest in the past 30 years, surpassing the 31% in 2007 and 29% in 2010.

The main driver behind the recent continuous significant rise in gold prices is the increasing market expectations for interest rate cuts by the Federal Reserve. Various economic indicators released in the United States suggest a series of issues currently facing the country, including weakness in the labor market and growing downward pressure on the economy. In such circumstances, many funds have been directed towards safe-haven assets like gold, seeking protection.

As a result, the market significantly priced in the expectation that the Federal Reserve would lower interest rates, which was reflected in the continuous rise in gold prices at that time.

Why did gold prices decline instead of rising after the FOMC meeting?

The news that "the Federal Reserve will cut interest rates" had already been priced in by the market before the meeting, so the 0.25% rate cut this time was completely expected, and there was not much surprise in the market. At the same time, Chairman Powell positioned this rate cut as a "risk management type of cut," avoiding a clear answer about entering a continuous rate-cutting cycle in the future. This statement somewhat disappointed the market and dampened some of the optimistic sentiment. Additionally, it strengthened the wait-and-see attitude regarding the pace of future rate cuts, leading to a drop in gold prices after a sharp rise.

Tip: Why is the presence or absence of the Fed's interest rate cuts so important for the recent fluctuations in gold prices?

In the gold market, what is traded is not only gold itself but also investors' expectations regarding the future price of gold. The "most fundamental driving force" behind these expectations is the assessment of the future direction of real interest rates in the market, which is one of the most fundamental factors influencing the rise and fall of gold prices.

• When the market anticipates a decline in real interest rates, gold prices rise.
• When the market anticipates an increase in real interest rates, the price of gold declines.

Observations of past gold prices show that gold prices and real interest rates typically have a clear negative correlation. Real interest rates are derived by subtracting the inflation rate from nominal interest rates. The Federal Reserve's interest rate cut policy significantly impacts nominal interest rates, which is why recent fluctuations in gold prices closely follow changes in market expectations regarding the Federal Reserve's rate cuts and the eventual interest rate decisions that are announced.

Nominal interest rate - Inflation rate = Real interest rate

What are the other factors for the rise in gold prices?

In addition, there are very important factors that promote the continuous rise in gold prices in the long term: for the past two years, major central banks around the world have continued to accumulate gold, with the People's Bank of China rapidly increasing its gold holdings since March 2022.

According to statistics from the World Gold Council, in the first half of 2025, the total net purchases of gold by central banks worldwide reached 123 tons, with a net increase of 22 tons in public gold reserves globally in June alone. According to the Central Bank Gold Reserves Survey Report published by the Council in June, a majority of the surveyed central banks (73%) believe that the proportion of the dollar in global reserves will moderately or significantly decrease over the next five years. At the same time, it is expected that the proportion of other currencies such as the euro and yuan, as well as gold, will increase in asset allocation.

One reason for the continuous rise in gold prices is that central banks are seeking to diversify their purchases of dollar assets.

Of course, in addition to the important driving forces mentioned above, the recent surge in gold prices is closely related to the following factors:

• Increased uncertainty due to tariff policies after President Trump's inauguration
• Slowdown in global economic growth and persistent inflationary pressures
• Decline in trust in the dollar
• Concerns about geopolitical risks

The series of "tariff policies" following President Trump's inauguration became the catalyst that directly triggered the surge in gold prices in 2025. Furthermore, the possibility of tariffs being imposed on imports of major metals traded on the New York Mercantile Exchange significantly disrupted the market, disrupting the normal price differential relationship between spot prices and futures prices in the short term.

Furthermore, continuous media coverage following the record high in gold prices, along with the amplification of sentiments on social media, led to a chaotic influx of substantial short-term capital into the gold market, causing gold prices to surge continuously before the meeting.

Predictions by Experts on Future Gold Price Trends

Despite recent fluctuations in gold prices, many institutions maintain an optimistic view on long-term trends.

UBS has raised its gold price target from $3,500 to $3,800 per ounce by the end of the year and increased its mid-2026 forecast from $3,700 to $3,900.

Goldman Sachs maintains its year-end target price for gold at $3,700 per ounce and its mid-2026 target price at $4,000.

Morgan Stanley stated that there is still a 5% upside potential for gold prices this year, predicting that they will surpass $3,800 per ounce by the end of this year and exceed $4,000 per ounce in the first quarter of next year.

According to famous brands such as Chow Tai Fook, Luk Fook Jewellery, Chow Sang Sang, and Chao Hong Ji, the price of pure gold jewelry in mainland China has already surpassed 1,050 yuan/gram on September 3, 2025, setting a new record high.

Based on the forecasts from the above institutions, the overall upward trend in gold prices may continue until 2026, and investors can look for buying opportunities during price declines according to the situation.

As a retail investor, can I still buy gold now?

Having understood the logic behind the recent rise in gold prices, I believe you are now able to make some judgments about the future situation. Since the current gold market is not yet over, there are still opportunities for both medium to long-term investments and short-term trades. However, you should avoid acting recklessly by simply following others. This is especially important for beginners in investing; if you blindly chase after high prices during volatile times or repeatedly buy at high prices and sell at low prices, you may find yourself financially unable to endure it. Here, I would like to share some investment experiences for reference:

For experienced short-term speculators, this is currently a very good entry opportunity for short-term trading. The market liquidity is high, and the short-term price direction is relatively easy to judge. Especially during sharp rises and falls, the power dynamics between bulls and bears are clear, creating many opportunities to profit. For those with experience, it will be easier to seize this favorable opportunity.

However, if beginners are trying to take advantage of recent fluctuations to engage in short-term trading, please remember this: start by observing with a small amount and never increase your funds recklessly. Psychologically breaking down can lead to easily losing everything. By learning how to use an economic calendar, you can timely track U.S. economic indicators and support your trading decision-making.

If you are purchasing physical gold for long-term holding purposes, you need to be mentally prepared to endure significant price fluctuations when entering the market now. While it has a long-term upward trend, consider whether you can withstand the intense fluctuations in the meantime.

It is certainly possible to include gold in your investment portfolio, but do not forget that the volatility of gold is comparable to that of stocks. Investing all your assets is never a wise choice. Diversified investment is safer.

There are a few points to note:

• The fluctuations in gold prices are significant, comparable to stocks, with an average annual fluctuation of 19.4% for gold and 14.7% for the S&P 500.
• The cycle of gold is very long, and when viewed from a perspective of over 10 years, it achieves value preservation, but there is a possibility of doubling in value over the next decade, as well as a possibility of halving.
• The transaction cost of physical gold is relatively high, usually between 5% and 20%.
• Excessive buying is not recommended. Let's not put all the eggs in one basket.