In 2025, precious metals experienced a historic bull market. This was driven by long-term macro trends as well as various factors at different stages, such as tariff risks and "de-dollarization" (January-April), sentiment swings and consolidation (May-August), Fed rate cuts and declining U.S. Treasury yields (August-October), and the collective weakening of G7 fiat currencies (November-December). Under the influence of these multiple intertwined factors, the gold market exhibited many new characteristics that differ from historical patterns. Looking ahead to 2026, gold remains an excellent asset for strategic allocation, with potential for further price appreciation, although two-way volatility and trading difficulty are likely to increase.
The year 2025 saw a historic bull run in precious metals. Spot gold in London surged over 60% cumulatively, setting new all-time highs 50 times throughout the year, marking its strongest performance in nearly four decades. Silver prices skyrocketed more than 150%, while platinum, palladium, and other precious metals also posted significant gains, with exchange trading volumes expanding rapidly. From many perspectives, 2025 was a historic year for precious metals.
The 2025 gold market was driven by long-term global macro trends as well as distinct bullish catalysts during different phases. Under the influence of these multiple factors, the market displayed many new features that diverge from historical experience. This article will analyze the 2025 gold market performance and its drivers, summarizing these new characteristics. Based on this analysis, it will provide an outlook for the 2026 gold market trend, aiming to offer reference for investor decision-making.
The gold market performance in 2025 can be broadly divided into four stages: (1) January-April: Gold prices rose steadily under the influence of Trump tariffs and "de-dollarization"; (2) May-early August: Market sentiment cooled from overheated levels, with balanced bullish and bearish forces leading to consolidation around $3,300 per ounce; (3) Late August-October: Disappointing U.S. economic data and a new round of rate cuts initiated by the Fed, coupled with declining U.S. Treasury yields, pushed gold prices higher; (4) November-December: Collective weakness in G7 currencies prompted a shift into commodity currencies (gold & silver), driving gold to new highs.
In the first half of the year, Trump administration tariff policies and "de-dollarization" were the primary drivers of the gold market. After Trump returned to the White House at the beginning of the year, he announced tariffs on basic metals like steel and aluminum in mid-February. This sparked panic in overseas markets about potential tariffs on precious metals, leading to a sharp migration of gold and silver inventories from London to New York. COMEX gold inventories surged by 500 tons, while LBMA inventories dropped significantly, resulting in substantial price increases for gold and silver.
Data from COMEX deliveries shows that due to tariff concerns and inventory migration, the delivery volume for the COMEX gold 2502 contract hit a yearly high of 7.66 million ounces in February 2025, with a delivery ratio reaching 13%. The London market even experienced a phenomenon of "queuing to withdraw gold." Concurrently, major Wall Street banks (e.g., JPMorgan) began large-scale delivery purchases in their precious metals client accounts, reflecting significant client capital entering the gold market. The delivery squeeze in February made the market aware that the freely available inventory in the precious metals market is actually quite limited, setting the stage for subsequent squeezes later in the year, particularly in silver.
Following the February tariff and delivery dynamics, Trump's "reciprocal tariffs" in April further catalyzed the gold rally. After the policy announcement, overseas markets experienced significant turbulence, with the U.S. market witnessing simultaneous declines in stocks, bonds, and the dollar, amplifying the USD's depreciation. The market began actively discussing "de-dollarization" – driven by strategic and tactical considerations, non-U.S. countries' reserves cannot be strongly tied to the USD, necessitating the search for safer, more independent investment alternatives. As a supra-sovereign asset, gold re-entered the investment spotlight. Data shows that countries like China, Brazil, and India reduced their holdings of U.S. Treasuries and correspondingly increased their gold reserves in 2025.
According to World Gold Council and IMF data, by mid-2025, gold's share in global central bank foreign exchange reserves rose to 23%, while the USD's share fell to 56%. If this trend continues, gold is projected to replace the USD as the world's largest reserve asset by around 2040.
By late April, overheated market sentiment triggered a correction in gold prices. At that time, domestic Chinese gold showed a significant premium over international prices, inflows into domestic gold ETFs increased rapidly, and investor sentiment was exuberant, indicating typical overheating signs in the gold market. Subsequently, influenced by certain risk factors (such as Trump's TACO, etc.), gold prices corrected from the high level around $3,400, with substantial long position profit-taking leading to a correction exceeding 10%.
After June, market sentiment returned to neutral levels, with bullish and bearish forces regaining relative balance. The price differential between domestic and international gold narrowed back to a neutral range of 3-5 RMB/gram, gold ETF holdings returned to levels seen in early April, and COMEX gold net long positions also declined significantly. During this period, international trade conflicts gradually eased, U.S. stocks and the USD exchange rate staged a temporary rebound, and gold prices generally entered a phase of consolidation.
In the latter part of the third quarter, the Federal Reserve resumed interest rate cuts, with declining rates reinjecting momentum into gold. In late August, Fed Chair Powell indicated at the Jackson Hole symposium that monetary policy stance needed adjustment based on changing prospects, signaling a clear dovish shift. Data-wise, U.S. non-farm payrolls and inflation figures for the third quarter successively fell short of expectations, leading the market to price in the Fed restarting its rate-cutting cycle in September.
On September 18, the Fed announced a "preventive" 25 basis point rate cut, emphasizing that risks were balanced towards employment. The Fed subsequently cut rates again in October and December, resulting in a total annual reduction of 75 basis points. Throughout this period, U.S. employment data remained weak, with unemployment showing clearer upside risks. Overall, from August to October, the gold market benefited from Fed rate cuts and declining U.S. Treasury yields, with international markets contributing the majority of the price gains during this period.
Since the fourth quarter, G7 fiat currencies collectively weakened, with the USD, Euro, and Yen each facing their own issues. For the Euro, French Prime Minister Le Cornu submitted his resignation, raising market concerns about French fiscal/debt pressures and rule-of-law crises at the EU level, damaging Euro credibility. For the Yen, Sanae Takaichi took office, and her accommodative policy stance potentially further促使ed a steepening of JGB yields and Yen depreciation, weakening Yen credibility. For the USD, the U.S. government announced a shutdown on October 1, which lasted until mid-to-late November, setting a new record for the longest shutdown in history.
From a macro perspective, the collective weakness of G7 currencies is essentially a result of the普遍 rise in fiscal debt pressures across countries in the post-MMT era. The "loose fiscal policy - high interest rates - high inflation" dynamic became an impossible trinity, significantly increasing fiscal fragility in G7 nations. This fiscal fragility manifested differently across countries, but common features included rising ultra-long bond yields, yield curve steepening, and exchange rate pressure. Against the backdrop of weak G7 fiat currencies, commodity currencies represented by gold and silver naturally strengthened. By year-end, gold prices broke through $4,500 and silver surpassed $70, both reaching new historic highs.
Reviewing the four main phases of the 2025 gold market reveals that it indeed exhibited new characteristics differing from traditional experience; these changes are reshaping gold's pricing logic.
A major new feature of the 2025 gold market was the strengthening pricing power of Asian capital and exchanges. Firstly, looking at exchange data, trading volumes at Shanghai's two major precious metals exchanges continued rapid growth in 2025. Shanghai further consolidated its position as the world's third-largest and Asia's largest gold trading market, gradually closing the gap with New York. Data shows that the average daily trading volume for gold on the SHFE + SGE reached approximately $65 billion in 2025, about 70% of the volume on NYMEX COMEX. Furthermore, the trading volumes on Shanghai's two major gold exchanges are still growing at an annualized rate of 100%, significantly enhancing their international importance.
From a capital perspective, Asian capital in the gold market also increased markedly, becoming a significant source of funding. According to World Gold Council data, Asian gold ETFs added 190 tons of physical gold in 2025, bringing total holdings to 405 tons, an 86% year-on-year increase. Compared to European and American capital, Asian funds focus more on medium-to-long-term trend variables affecting the gold market, such as de-dollarization, geopolitical situations, and central bank gold buying. Conversely,欧美 capital maintains a more traditional perspective, focusing on the performance of USD assets like U.S. Treasuries and stocks. The 2025 gold market witnessed multiple instances of divergence between Asian session trends and European/American session trends. Over the full year, the price trend during the Asian session was significantly stronger than during the European and American sessions.
Another characteristic of the gold market since 2025 is that funding sources have become明显 more diversified and complex. On one hand, funding sources for gold ETFs have diversified, especially after the second half of the year, with significant increases from Indian and Japanese gold ETF flows. On the other hand, capital with high-risk appetites, such as from cryptocurrencies and U.S. stocks, has also concurrently entered the gold market, leading to a relative weakening of gold's traditional safe-haven characteristics.
Regarding cryptocurrencies, stablecoin giant Tether significantly increased its gold holdings, reaching 104 tons by Q3 2025, a level comparable to the gold reserves of a medium-sized country. In equities, "AI + Gold" became a popular barbell strategy, with many U.S. stock investors simultaneously increasing allocations to AI stocks and gold. This has led to an increasingly positive correlation between gold and U.S. stocks. It is well-known that a key aspect of gold as a traditional safe-haven asset is its orthogonality to risk assets. In the current market environment, due to the influx of various risk capital, gold's traditional safe-haven attributes are relatively weakening.
As mentioned earlier, a natural consequence of the diversification and complexity of gold market funding is a trend of rising volatility. Furthermore, there is a high positive correlation between gold volatility and gold price changes. For instance, the correlation between at-the-money option implied volatility and monthly gold price changes in 2025 reached 40%. The author notes that when market uptrend signals are confirmed and price trends are clear, capital rapidly enters the gold market, quickly leading to a relatively crowded market structure.
Based on 2025's experience, rising gold volatility often implies increased two-way price swings and diminished profit potential. The author categorized over 200 trading days of London gold into low, medium, and high volatility groups. The low volatility group exhibited the best risk-return characteristics, with a probability of gain around 58%. However, as volatility increased, the risk-reward ratio declined rapidly.
Despite increasing trading volatility, from an allocation perspective, institutions both domestically and internationally remain systematically under-allocated to gold. Research from foreign banks indicates that approximately 54% of U.S. institutional investors hold no gold ETFs whatsoever. Even among those that do, the average allocation is only around 0.2%, far below the recommended allocation (2%-5%) suggested by major foreign banks. Domestically, due to factors like investment culture, accounting treatment, and risk/stop-loss considerations, most Chinese institutions are also relatively under-allocated to gold.
In summary, 2025 witnessed a historic bull market in precious metals, driven by both long-term macro trends and various stage-specific factors. From January to April, the market traded on tariff risks and de-dollarization; from May to early August, sentiment reversed and adjusted, leading to price consolidation; from late August to October, the market focused on the rate-cutting cycle and falling U.S. Treasury yields; and from November to December, collective G7 currency weakness propelled the rise of commodity currencies (gold and silver).
Under the influence of these intertwined factors, the gold market exhibited new characteristics differing from historical patterns. The author observed a shift in pricing power "East rising, West declining," with significantly strengthened Asian pricing influence. Concurrently, gold market funding became more diversified and complex, a process leading to increased market volatility. However, from a long-term perspective, both institutional and household sectors, domestically and internationally, remain under-allocated to gold assets.
Looking ahead to 2026, the author believes gold remains an excellent asset for strategic allocation. Gold's long-term logic includes: the collective weakening of G7 sovereign fiat currencies in the post-MMT era; the gradual weakening of the U.S. and USD system in technology, military, and geopolitical spheres, coupled with optimization of central bank reserve structures; and the relative under-allocation by domestic and international institutions and households. Overall, the longer the perspective, the more certain the long-term bull case for gold becomes, affirming its role as a strong strategic allocation asset.
On the other hand, from a trading perspective, gold volatility may further increase in 2026, making trading more challenging. As gold lacks a fundamental valuation model, its price fluctuations are primarily influenced by fund flows and supply/demand dynamics. With the influx of risk capital (e.g., from U.S. stocks, virtual currencies, etc.), gold volatility could rise further. Volatility in silver, platinum, and palladium may also exert some influence on gold. Additionally, differing views domestically and internationally regarding the 2026 outlook for U.S. Treasuries and the USD exchange rate, alongside significant internal Fed分歧 on the rate-cut path, could also impact the rhythm of the gold market.
Overall, the author believes gold has room for further appreciation in 2026, but two-way volatility and trading difficulty are likely to increase. For most investors, adopting a long-term allocation mindset is recommended. Buying during low volatility periods and selling during times of exuberance is prudent; excessive market enthusiasm during specific periods warrants increased caution and carefulness.
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