Gold has always been a precious metal that attracts much attention. Its future forecast is affected by various factors, including economic conditions, geopolitical situations, and central bank policies. In general, the future trend of gold shows a characteristic of long – term upward – trend with fluctuations, and short – term volatility intensification.
Long – term Trend: Structural Bull Market Continues
Weakening of the US Dollar Credit System: The process of de – dollarization is accelerating. Central banks around the world have been continuously increasing their gold purchases to hedge against the risks of the US dollar. In 2024, the global central bank gold purchases exceeded 1000 tons, and the proportion of the US dollar in global foreign exchange reserves has dropped from 71% in 2000 to 58% in 2024. Emerging markets such as China and India are promoting the diversification of foreign exchange reserves, and gold, as a “non – political” asset, has become the first choice. Moreover, the proportion of the US federal debt to GDP has reached 125%. The expansion of fiscal deficits and Trump’s tariff policies have exacerbated the credit rift of the US dollar. The systemic trust crisis in the market for US dollar assets will support the gold price in the long term.
Dual Drive of Geopolitical and Stagflation Risks: Geopolitical conflicts have become the norm. Conflicts such as those in Ukraine and the Middle East, as well as trade protectionism, have increased the demand for safe – haven assets. The negative correlation between gold and US stocks and bonds has become stronger, making gold the “ultimate means of payment” during crises. In addition, the global inflation is sticky while the economic growth rate is slowing down. Historical data shows that in a stagflation environment, the annualized return rate of gold can reach 15% – 20%, far exceeding other assets.
Central Bank Gold Purchases and Supply – Demand Imbalance: The strategic reserve demand of central banks is increasing. In the first quarter of 2025, China increased its gold reserves by 15 tons, and countries such as Russia and Turkey continue to de – dollarize. It is expected that 66% of central banks will increase the proportion of gold reserves in the next 5 years, forming a rigid buying market. However, the growth rate of global gold mining is slowing down, and the recovery volume is limited, while the consumption demand accounts for more than 80%. The supply – demand gap may expand.
Medium – term Outlook (2025 – 2027)
2025: Policy Game and Price Breakthrough: There is a possibility that the Federal Reserve will turn to a loose monetary policy. If it starts to cut interest rates in the second half of the year, the downward trend of real interest rates will release the pressure on the gold price, and the target price is expected to reach $3400 – $3500 per ounce. In addition, the Trump administration’s policy changes in the US presidential election may cause market fluctuations. Gold may experience a phased correction to $3000 – $3200, but the correction is a buying opportunity.
2026 – 2027: Deepening of De – dollarization and Technical Bull Market: The multi – polar currency system is taking shape. Mechanisms such as the New Development Bank of the BRICS countries are promoting the monetization of gold reserves. The proportion of gold settlement in global trade is expected to increase from the current 1% to 5%. Technically, the RSI at the monthly level stands firm above 70. After a similar historical pattern, the average increase in 12 months is 21%, and the target price is expected to reach $4000.
Short – term Risks and Volatility Factors
Liquidity Disturbance: The Fed‘s balance – sheet reduction and the large – scale issuance of US bonds may lead to a shortage of collateral, triggering short – term selling. For example, the gold price plummeted 7% in a single day in April 2025.
Extreme Market Sentiment: The proportion of non – commercial net long positions in COMEX gold is close to the historical danger threshold of 40%. The profit – taking of speculative funds may aggravate the volatility.
Periodic Strengthening of the US Dollar: If the US economy does not experience a “hard landing” or the Federal Reserve unexpectedly raises interest rates, the rebound of the US dollar index above 105 may suppress the gold price.
Conclusion
In conclusion, the future of gold is expected to be a complex interplay of various factors. The long – term upward trend is supported by the weakening of the US dollar credit system, geopolitical risks, and central bank gold purchases. However, short – term and medium – term fluctuations will be inevitable due to factors such as policy changes and market sentiment. Investors should have a clear understanding of these factors and formulate reasonable investment strategies according to their own risk tolerance and investment goals.
For long – term investors, gold can be used as an important part of asset allocation to hedge against currency devaluation and systemic risks. It is recommended to allocate 5% – 10% of physical gold or gold ETFs in the portfolio. For short – term investors, they need to pay close attention to the interest – rate decisions of the Federal Reserve, geopolitical events, and other factors, and use futures and options tools to capture price fluctuations. At the same time, investors should also be aware of the risks of market overheating and excessive speculation. When the market sentiment is too high, they should be cautious about chasing high prices. Every price correction may be an opportunity to increase the position, but it is necessary to avoid blindly following the trend. In general, in the context of the current global economic uncertainty and geopolitical tensions, gold still has a high investment value and strategic significance.
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