On March 14, 2025, the price of the main contract of COMEX gold futures broke through $3,000/ounce for the first time, setting a record high. Although it fell slightly to around $2,993, this milestone event triggered heated discussions in the market about the future trend of gold. In the complex economic and geopolitical context, the safe-haven property of gold has been continuously magnified, but can its price continue to rise? Can investors still arrange to do more? This article will analyze from three aspects: driving factors, potential risks and investment strategies.

Core driving factors for gold to break through $3,000

1. Surging safe-haven demand: dual catalysis of geopolitics and policy uncertainty

The Trump administration in the United States has recently increased its protectionist trade policies, including imposing tariffs on imported steel and aluminum products, and threatening to impose a 200% tariff on EU alcoholic products, exacerbating concerns about global economic growth. Market expectations for economic recession and a correction in US stocks have increased, driving funds to accelerate the influx of safe-haven assets such as gold.
Geopolitical risks (such as the situation in the Middle East and the conflict between Russia and Ukraine) and the trend of "de-dollarization" further strengthen the monetary attributes of gold. Central banks of various countries continue to increase their gold reserves to diversify the risks of US dollar assets. In 2024, the global central bank's gold purchases reached 1,045 tons, breaking the 1,000-ton mark for three consecutive years.

2. Monetary policy shift: Fed rate cut expectations and inflationary pressure

The Fed cut interest rates by 25 basis points in December 2024. Although the market has different expectations on the future rate cut path, the US inflation data (CPI 2.8% year-on-year) is still higher than the target value, and the expectation of a downward trend in real interest rates provides support for gold. Historical experience shows that gold prices tend to perform strongly during rate cut cycles.
The worsening of the US fiscal deficit and debt problems have exacerbated the risk of credit currency depreciation, and the demand for gold as an anti-inflation tool has increased significantly.

3. Fund allocation and market sentiment: joint efforts of institutions and retail investors

Wall Street institutions have increased their allocation of gold, and some hedge funds have turned to gold assets due to concerns about declining profits of US stock companies. The demand for gold ETF investment increased by 25% year-on-year in 2024, a four-year high.
Speculative funds have poured into the gold futures market, and the delivery volume of COMEX gold contracts has increased significantly in March, and the increase in liquidity has further pushed up prices.

Potential risks and challenges

1. Short-term technical correction pressure

Profit-taking may occur after the rapid rise in gold prices. At the end of February, gold prices had fallen back to $2,877 due to technical overbought, and may face resistance near the current $3,000 mark.
If U.S. economic data improves beyond expectations (such as employment and GDP growth), it may weaken expectations of interest rate cuts, causing gold to be under pressure in the short term.

2. High gold prices suppress physical demand

In 2024, global gold jewelry consumption fell by 11% year-on-year, and high gold prices suppressed the consumer end. Although it may be digested by the market in the long term, it may weaken some fundamental support in the short term.

3. Risk of sudden changes in policies and market sentiment

If the Trump administration's policies turn to easing (such as rumors of canceling gold import tariffs), or geopolitical conflicts unexpectedly cool down, it may trigger a decline in risk aversion.
In a liquidity crisis, gold may be sold off simultaneously with other risky assets, such as the chain reaction caused by the plunge in U.S. stocks.

Investment strategy: How to seize the opportunity of gold in the future market?

1. Long-term bullish logic remains unchanged, buy on dips

  • Goldman Sachs, UBS and other institutions predict that the gold price may reach $3,100-3,200 by the end of 2025, and the central bank's gold buying wave and the "de-dollarization" trend will provide long-term support. It is recommended to make core configurations through gold ETFs (such as SPDR Gold Shares) or physical gold to reduce the impact of short-term fluctuations.

2. Capture trading opportunities in short-term fluctuations

  • Pay attention to the Fed's policy signals, US inflation data and geopolitical events, and use gold futures or options for swing operations. For example, if the gold price falls back to around $2,900, it can be regarded as a technical buying point.

3. Diversified allocation and risk control

  • Avoid the risk of concentrated single assets, and configure gold with government bonds and commodities. For example, when the US stock market falls back, the negative correlation between gold and US bonds can balance the returns.
  • Set stop loss points to prevent the impact of sudden policies or market black swan events.

Conclusion: Be cautious in going long, but dynamic adjustments are required

Gold breaking through $3,000 is not the end, but the starting point of a new cycle. Although there may be technical adjustments and policy disturbances in the short term, the long-term driving factors (central bank gold purchases, geopolitical risks, monetary easing) remain solid. For investors, it is still possible to arrange long positions, but positions need to be adjusted flexibly according to market changes and be wary of high volatility risks. As Wall Street analysts said: "The bull market in gold is far from over, but the path will be more tortuous."

*Disclaimer: The content of this article is for learning purposes only and does not represent the official position of VSTAR, nor can it be used as investment advice.