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Can gold prices reach US$4,000 in 2025?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: Can the price of gold reach US$4,000 in 2025?" Hope it will be helpful to you! The original content is as follows:
For most of the time so far in 2025, gold prices have almost continued to rise, setting record highs repeatedly. Gold prices have nearly doubled since October 2022, up more than 25% in 2025 alone, reaching a new all-time high of $3,500 per ounce on April 22. The price level of $4,000 was once regarded as a fantasy, but is now being discussed publicly in the global trading hall. This article analyzes the driving factors behind this significant rise in gold and the possible situations that may occur next.
Geopolitical tensions are the main catalyst
The global environment in 2025 is far from peace. Wars in the Middle East and Eastern Europe continue, and long-term solutions still seem out of reach. Tariff friction continues. The U.S. tariffs on China have increased to 145%, and China has increased tariffs on U.S. goods from 84% to 125%. In the latest round of operations, the Trump administration has re-taken a trade war stance. This growing global uncertainty has prompted investors to turn to safe-haven assets, and gold is one of the most tested safe-haven assets. As global trade is damaged and economic growth prospects are bleak, the hedging effect of gold is becoming increasingly obvious.
Monetary policy expectations and interest rate cut expectations
Historically, gold tends to perform better when interest rates are low. The current monetary policy outlook in the United States provides a favorable environment for this precious metal. Given the weak economic signal, it is generally expected that the Fed will cut interest rates at least twice in 2025. U.S. consumer prices fell unexpectedly in March, strengthening expectations for a relaxed policy stance in the middle of the year, according to the latest U.S. Department of Labor. Market participants now believe that the probability of a 100 basis point cut by December is about 30%.
However, the Fed may be forced to change its policy direction as tariffs may cause inflation to xm-forex.come back. This move could undermine the upward momentum of gold. However, for now, lower interest rates make non-yield assets such as gold more attractive and have the potential to drive further price increases.
The weakening of the US dollar boosts gold attractiveness
The US dollar index recently saw its biggest drop since 2022, hitting a new annual low. A weaker dollar usually supports gold, which makes it easier for holders of other currencies to buy gold. This trend, coupled with increasing uncertainty, has stimulated strong demand and further boosted gold prices. In fact, there have been signs of increasing demand since the beginning of the year. Net inflows to gold funds reached a record $80 billion as of mid-April, according to Bank of America Global Research.
Central Bank Purchase and De-Dollarization
Another factor driving the rise in gold prices is the rise in structural physical demand, especially as central banks around the world are actively increasing their gold reserves. The People's Bank of China raised its gold reserves to record levels in the first quarter of 2025, highlighting the strategic importance of gold. This structural demand is consistent with the broader de-dollarization efforts led by the BRICS countries. Some countries are diversifying their investments from U.S. Treasury bonds and the dollar toward gold as a reliable store of value, which strengthens the long-term demand base.
The flow of funds on exchange-traded funds (ETFs) reflects the demand for retail investors and institutions
Investors' growing optimism about gold is also reflected in exchange-traded funds (ETFs). In March 2025, gold ETFs experienced large inflows, especially in North America. These capital flows indicate that retail investors and institutional investors have a strong interest, further exacerbating market tension.
Main risks facing gold prices reaching the $4,000 target
Although the overall environment is conducive to rising gold prices, gold may not reach the $4,000 target due to the following factors, but may experience a sharp decline:
An unexpected rise in inflation and a reversal of interest rates: If tariffs and supply disruptions lead to a resurgence in inflation, the central bank may be forced to abandon its easing policy. The Fed's turn to tightening policy may be positive for the dollar, put downward pressure on gold prices and may break bullish expectations.
Geopolitical stability: Easing of global tensions, especially between the United States and China or Eastern Europe, may significantly reduce the demand for safe-haven. While this is not the basic situation in 2025, it is still an unexpected risk that traders must consider. In fact, gold prices have fallen from recent highs after U.S. President Trump hinted that tariffs on China could be lowered.
Technical overbought situation: The sharp rise in gold prices increases the possibility of a pullback. If the upward momentum slows down, profit-taking may trigger a rapid and violent sell-off. With any parabolic riseLikewise, volatility is inevitable: prices tend to experience a short-term downward trend before setting new all-time highs. Traders who adopt short-term strategies should pay attention to such price declines and conduct risk management: avoid large-scale trading, set stop loss positions, and diversify their portfolios.
Is $4,000 a fantasy or a prediction?
The xm-forex.combined effect of macroeconomic, structural and technical factors is pushing gold into unknown areas. Supported by macroeconomic uncertainty, interest rate cut expectations, geopolitical tensions and central bank demand, the price level of $4,000 is no longer just a theoretical upper limit, but a reasonable next target. However, the road to rising gold prices is unlikely to be smooth sailing. A pullback, shift in market sentiment and external shocks may slow the rate of rise. However, this view remains persuasive for long-term holders.
The above content is all about "[XM Foreign Exchange Market Analysis]: Can gold prices reach 4,000 US dollars in 2025?", which were carefully xm-forex.compiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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