Analysis of the Driving Factors Behind the Sustained Rise in Gold Prices and Their Investment Implications

Based on the market data, professional institutional analyses, and latest research I have collected, I now provide you with a detailed gold market analysis report.

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Indicator	Figure
Current Gold Price	$4,506.00/oz
2025 Price Increase	+70.7%
52-Week High	$4,552.70/oz
52-Week Low	$2,640.10/oz
52-Week Trading Range	$1,912.60

The gold market witnessed a historic rally in 2025, with prices surging from around $2,640 at the start of the year to break the $4,000 mark for the first time in October, setting a new all-time high for gold prices in human history. This annual gain ranks among the strongest performances since the 1970s.

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According to data from the World Gold Council,

, a significant increase from the average annual level of 600 tons before 2022[1][2].

• People’s Bank of China
  : Has increased its gold reserves for 13 consecutive months, with gold reserves exceeding 2,300 tons as of November 2025, accounting for slightly over 8% of its foreign exchange reserves[3]
• Emerging Market Central Banks
  : The proportion of gold in foreign exchange reserves has risen from 4% a decade ago to the current 9%, representing a 125% increase
• Developed Market Central Banks
  : The proportion of gold in foreign exchange reserves has reached 20%

Research from J.P. Morgan shows that central bank quarterly gold purchases are expected to remain at around 755 tons in 2026. Although this is a decline from the peak, it is still significantly higher than the historical average (400-500 tons)[2]. This structural shift in demand forms the foundation of gold’s long-term bull market.

The Federal Reserve has cut interest rates consecutively since 2024, and

[4][5]:

• As a zero-yield asset, gold’s relative appeal increases during interest rate decline cycles
• The federal funds rate is expected to remain in an easing stance through 2026
• A “policy mismatch” between short-term and long-term interest rates may lead to tighter financial conditions, prompting more aggressive rate cuts by the Federal Reserve

State Street Global Advisors points out that even if the Federal Reserve pauses rate cuts, the rise in term premiums driven by fiscal pressure may weaken the US dollar, providing support for gold[5].

Geopolitical factors have become a key catalyst for gold’s rise[6]:

• Spillover Effects of the Russia-Ukraine Conflict
  : After the freezing of Russian assets in 2022, central banks have deep concerns about the safety of US dollar-denominated assets
• Trade War Risks
  : Tariff uncertainties have prompted investors to seek alternatives to US dollar assets
• Regional Conflicts
  : Geopolitical events in Venezuela and other regions continue to disrupt the market

Sprott’s research notes, “We are in a metals war”, as governments and investors around the world are re-evaluating the allocation logic of reserve assets[6].

The US Dollar Index has a strong negative correlation with gold. The US dollar weakened in 2025 due to the following factors[5]:

• Persistent expansion of US fiscal deficits and increasing government debt burdens
• Eroding investor confidence in US Treasuries as a “safe asset”
• The new Fed leadership may adopt a more dovish policy stance

Since gold is priced in US dollars, the weakening dollar directly enhances the purchasing power of gold for global investors.

Although inflation has moderated, the market remains vigilant against long-term inflation risks[7]:

• Many economists predict that inflationary pressures will persist in some periods of 2026
• Gold can effectively protect purchasing power in an inflationary environment
• Compared to fiat currency assets such as bonds and cash, gold’s wealth preservation advantages are more prominent

Gold ETFs attracted

in 2025, as investors are increasing their gold exposure through multiple channels[6]:

• North American investors: Have renewed their preference for gold as a hedging tool in investment portfolios
• Chinese investors: Gold ETFs have become an important channel for wealth allocation
• Indian investors: Seasonal recovery in physical gold demand

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Ticker	Company Name	H2 2025 Increase	20-Day Moving Average	50-Day Moving Average	Daily Volatility
NEM	Newmont Corporation	+81.1%	$102.65	$93.27	2.64%
GOLD	Barrick Gold	+72.5%	$34.33	$30.12	2.61%
AEM	Agnico Eagle Mines	+56.7%	$175.30	$169.49	2.31%
FNV	Franco-Nevada	+38.8%	$214.04	$203.65	1.86%

1. Leverage Effect
   : Mining stocks typically have higher volatility than spot gold prices. When gold prices rise, mining companies’ profit growth is more substantial.

2. Cost Rigidity
   : The fixed costs of gold mining are relatively stable, so price increases directly translate to higher profit margins.

3. Improved Cash Flow
   : Strong gold prices have left mining companies with ample cash flow, enabling accelerated project investment and increased shareholder returns (share buybacks + dividends).

4. M&A Expectations
   : Sufficient cash reserves provide financial support for industry consolidation, with giants like Newmont potentially becoming acquirers.

According to Newmont Corporation’s 2026 outlook[8]:

• Gold production in 2026 is expected to be flat compared to 2025
• The commissioning of the Ahafo North project will partially offset production declines at other mines
• Cost pressures may rise (increased capital expenditures, higher taxes)
• Amid high gold prices, profits are still expected to grow significantly even if production remains flat

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Forecasting Institution	Forecast Range	Time Frame	Probability Weight
J.P. Morgan	$5,000/oz	End of 2026	Base Case
State Street	$4,000-$4,500	2026	Benchmark Scenario (50%)
Market Consensus	$4,600-$4,800	2026	—
Optimistic Scenario	$4,500-$5,000	2026	30%

Referring to the “60/20/20” gold investment rule[7]:

• Core Allocation (5-10%)
  : Treat gold as a foundational hedging tool in the investment portfolio
• Tactical Allocation (2-5%)
  : Adjust dynamically based on gold price trends
• Opportunistic Allocation (1-3%)
  : Buy on dips during pullbacks

Channel	Suitable Investors	Advantages	Disadvantages
Physical Gold (Bars/Coins)	Long-term investors	Direct ownership, no counterparty risk	Storage costs, low liquidity
Gold ETFs (GLD, etc.)	Institutional/retail investors	Convenient trading, low costs	No physical delivery
Gold Mining Stocks	Investors with high risk tolerance	Leverage effect, dividend income	High volatility, exposed to operational risks
Gold Futures/Options	Professional investors	High leverage, hedging function	High risk, requires professional expertise
Gold IRA	Retirement planners	Tax advantages	Numerous regulatory restrictions

• Price Volatility Risk
  : Gold may experience a pullback after its record-breaking rally
• Interest Rate Sensitivity
  : A shift to a hawkish stance by the Federal Reserve may pressure gold prices
• Liquidity Risk
  : Physical gold may be difficult to liquidate quickly in emergencies
• Cyclical Risk
  : Mining stocks are subject to operational factors such as production volume and costs

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The gold market is in a structural strong bull market, with

: the long-term trend of central bank gold purchases, the Federal Reserve’s monetary easing policy, geopolitical risk premiums, expectations of a weaker US dollar, and demand for inflation hedging have jointly driven gold’s historic price breakthrough.

For investors:

• Short-term
  : Beware of the risk of chasing highs, and consider accumulating positions on pullbacks
• Medium-term
  : Fundamental support remains solid, with gold prices expected to challenge $5,000/oz in 2026
• Long-term
  : The de-dollarization trend and central bank gold purchase demand will continue to support gold’s role as a store of value

As a leveraged investment tool for gold, gold mining stocks have demonstrated significant excess return potential in the current environment, but investors should allocate them rationally based on their own risk preferences.

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[0] Gilin AI Financial Database - Real-time data on gold, mining stocks, and market indices (January 9, 2026)

[1] J.P. Morgan - “De-dollarization: The end of dollar dominance?” (https://www.jpmorgan.com/insights/global-research/currencies/de-dollarization)

[2] J.P. Morgan - “Gold price predictions from J.P. Morgan Global Research” (https://www.jpmorgan.com/insights/global-research/commodities/gold-prices)

[3] Straits Times - “Gold poised to continue shining in 2026 amid central bank demand, geopolitical flashpoints” (https://www.straitstimes.com/business/companies-markets/gold-poised-to-continue-shining-in-2026-amid-central-bank-demand-geopolitical-flashpoints)

[4] Sprott - “Gold & Silver Outlook 2026” (https://sprott.com/insights/gold-silver-outlook-2026/)

[5] State Street Global Advisors - “Gold 2026 Outlook: Can the structural bull cycle continue to $5,000?” (https://www.ssga.com/us/en/intermediary/insights/gold-2026-outlook-can-the-structural-bull-cycle-continue-to-5000)

[6] Yahoo Finance - “‘We’re in a metals war’: Gold, silver track their best year since 1970s” (https://finance.yahoo.com/news/were-in-a-metals-war-gold-silver-track-their-best-year-since-1970s-as-volatility-grips-trade-211053662.html)

[7] CBS News - “What is the 60/20/20 rule for gold investing” (https://www.cbsnews.com/news/the-60-20-20-rule-for-gold-investing-why-it-matters-now/)

[8] GuruFocus - “Newmont (NEM) 2026 Gold Production and Financial Outlook” (https://www.gurufocus.com/news/3158481/newmont-nem-2026-gold-production-and-financial-outlook)