In-depth analysis of Hong Kong gold price trends: Why will the gold market continue to heat up in 2025?

As we enter 2025, the global investment market faces an unprecedentedly complex situation. Gold, as a representative of safe-haven assets, has once again become a market focus. From the correction after reaching a historic high of $4,400 per ounce in October last year, to the ongoing price fluctuations this year, investors are pondering the same question: How will the future trend of Hong Kong gold prices develop? What is the underlying logic behind this round of gold market movements?

How Do Institutions View It? Experts Are Collectively Optimistic About the Long-Term Outlook

Before discussing the future of gold, let’s look at the attitudes of mainstream investment institutions.

J.P. Morgan Commodity Analysis Team characterizes the recent correction as a “healthy adjustment.” Although they remain cautious about short-term risks, they are very confident in the long-term trend and have raised their Q4 2026 target price to $5,055 per ounce.

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

More aggressive are Bank of America strategists, who, after setting their 2026 gold target at $5,000 per ounce, further indicated that gold prices could even surge past $6,000 next year.

These forecasts are not baseless. According to Reuters data, the gains in gold during 2024-2025 have approached the highest levels in nearly 30 years, surpassing 31% in 2007 and 29% in 2010. Reference prices for pure gold from Hong Kong jewelry brands such as Chow Tai Fook, Luk Fook Jewelry, and Chow Sang Sang remain solidly above HKD 1,100 per gram, with no obvious decline.

The Three Main Drivers Behind the Rise in Gold Prices

Driver One: Continued Uncertainty in Trade Policies

A new round of tariff policies has triggered increased market risk sentiment, serving as the immediate catalyst for the rise in gold prices in 2025. Policy uncertainties have led to a surge in safe-haven demand, pushing gold prices higher.

Historical experience shows that during similar periods like the US-China trade friction in 2018, gold typically gains 5%-10% in the short term. Under current market conditions, similar safe-haven demand is re-emerging.

Driver Two: Central Bank Reserve Strategy Adjustments

Global central banks continue to increase their gold holdings. According to the World Gold Council (WGC) report, in Q3 2025, net gold purchases by central banks reached 220 tons, a 28% increase quarter-over-quarter. In the first nine months, central banks bought approximately 634 tons of gold, slightly below the same period in 2024 but still at high levels.

More notably, the WGC released the “2025 Central Bank Gold Reserve Survey”. The survey shows that 76% of surveyed central banks expect to increase their gold reserves as a proportion of total reserves over the next five years, while most also anticipate a decline in dollar reserves. This structural shift is reshaping the global asset allocation landscape.

Driver Three: Federal Reserve Rate Cut Expectations and Actual Interest Rate Trends

Gold prices have a clear negative correlation with real interest rates: lower interest rates → higher attractiveness of gold. Therefore, the Federal Reserve’s policy stance is a key indicator for gold market movements.

According to CME interest rate tools, the probability of the Fed cutting rates by 25 basis points at the December meeting is as high as 84.7%. Whenever the Fed signals a change in policy, gold prices tend to fluctuate accordingly. The market’s adjustment of rate cut expectations after the September FOMC meeting last year was one of the main reasons for the correction in gold prices.

Real interest rate = Nominal interest rate - Inflation rate. When the Fed cuts rates, nominal interest rates are directly lowered, reducing the opportunity cost of holding gold and making gold more attractive relative to other interest-bearing assets.

Deep Macro Background Supporting Gold

Beyond these immediate drivers, deeper structural economic factors are also at play:

Global high debt levels and slowing growth — As of 2025, global debt totals $307 trillion (IMF data). High debt levels limit the room for interest rate adjustments, leading to a tendency for monetary policy to remain accommodative, indirectly lowering real interest rates and boosting gold appeal.

Dollar confidence fluctuations — When market confidence in the dollar wanes, dollar-denominated assets like gold benefit, attracting more capital inflows.

Persistent geopolitical risks — Ongoing conflicts such as the Russia-Ukraine war and tensions in the Middle East continue to elevate demand for safe-haven assets.

Short-term capital flows — Media reports and social media dissemination drive large amounts of short-term capital into the market, accelerating short-term price increases.

Characteristics of Gold Volatility and What Investors Need to Know

Investors must understand the risk features of gold:

Gold has an average annual amplitude of 19.4%, comparable to the S&P 500’s 14.7%. In other words, gold’s volatility is on par with the stock market.

Gold’s price cycle is very long. Over a horizon of more than 10 years, gold functions as a store of value, but within that period, it can double or halve. Short-term, intense fluctuations are inevitable.

Physical gold trading costs are relatively high, typically between 5%-20%, which significantly erodes investment returns.

For investors in Taiwan and Hong Kong, denominating gold in foreign currencies also involves exchange rate risk. Changes in USD/TWD and USD/HKD can alter the returns when measured in local currency.

Investment Approaches Based on Risk Tolerance

Short-term traders: Volatile markets offer abundant trading opportunities. Liquidity is ample, and the logic of price movements is relatively clear, especially during sharp rises or falls, where bullish and bearish forces are easily observed. However, beginners should start with small amounts to test the waters and avoid over-leveraging that could lead to liquidation. Using economic calendars to track US economic data can aid decision-making.

Long-term investors: If planning to buy physical gold as a long-term asset, be prepared for significant fluctuations. Although the long-term trend is upward, intense volatility can test investors’ mental resilience.

Portfolio allocators: Including gold in a diversified portfolio is feasible, but do not allocate all funds to it. Given gold’s volatility comparable to stocks, diversification remains prudent.

Maximizing returns: One can hold long-term positions while exploiting price swings for short-term trades. Data releases during US market hours often amplify volatility, providing entry points for short-term trading. This strategy requires experience and risk management skills.

Key Reminders for Entry at This Moment

Short-term fluctuations in Hong Kong gold prices are inevitable, especially around US economic data releases and Federal Reserve meetings. While the long-term fundamentals remain intact, caution is advised regarding short-term risks.

Regardless of the strategy, the core principles are: avoid blindly following the crowd, do not over-concentrate, and do not ignore risks. The current gold market is far from over, but opportunities and risks often coexist.