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Likes ReceivedSpot gold breaks through $2,400/oz, should we chase or wait now?
The recent surge in gold prices to a historic high of $3,800 has left many investors itching to get in. For ordinary investors, blindly chasing the rally is not advisable, but opportunities during pullbacks can be considered for medium-to-long-term positioning. Below, we break down the underlying logic and specific strategies.
Why the gold rally? Understanding the core drivers of the current market
Gold's breakthrough of $3,800/oz in 2025 is the result of multiple converging factors:
● Global monetary policy shift: In 2025, the Fed shifted its policy focus from "controlling inflation" to "balancing employment and inflation risks," initiating a rate-cutting cycle. Other major central banks also pivoted toward easing. This has pushed real interest rates into negative territory, significantly reducing the holding cost of gold as a zero-yield asset and boosting its appeal.
● Escalating geopolitical conflicts: Ongoing tensions in the Middle East and the prolonged Russia-Ukraine war have heightened market demand for safe-haven assets, driving investors toward gold for protection.
● Erosion of confidence in the dollar system: With U.S. federal debt surpassing $36 trillion, concerns about the dollar's stability are growing. Meanwhile, the global "de-dollarization" trend is accelerating, with many central banks increasing gold reserves to diversify their holdings. For example, holdings in SPDR Gold Trust, the world's largest gold ETF, rose to 1,005.72 metric tons by the end of September 2025, with a single-day increase of 8.87 tons, reflecting strong institutional demand.
Facing a complex market environment, retail investors should avoid emotional trading and adopt strategies tailored to their investment horizons.
● Short-term trading: Beware of pullbacks, avoid chasing highs
○ Technical indicators show the market is in "equilibrium": Gold's 14-day Relative Strength Index (RSI) currently stands around 48.93, in neutral territory, indicating balanced buying and selling pressure. However, the Moving Average Convergence Divergence (MACD) has flashed a short-term bearish signal, suggesting potential consolidation or a pullback.
○ Recommendation: For investors not yet positioned, waiting for a pullback before buying in batches is the safer approach. Key support levels to watch include the $3,650-$3,680 range formed by moving averages.
● Medium-to-long-term positioning: Focus on core drivers, accumulate on dips
○ Gold's three core bullish drivers remain intact: The Fed's accommodative policy, prolonged geopolitical conflicts, and sustained central bank buying form a "golden" supporting prices. Major institutions like Goldman Sachs see gold's long-term target above $3,700, with potential to challenge $4,000 in extreme scenarios.
○ Recommendation: Long-term investors can adopt a "dollar-cost averaging" approach, regularly allocating funds to gold ETFs (e.g., the domestic ETF with code 518880) or physical bars to smooth out volatility. For household portfolios, gold allocations should generally stay within 5%-10%, primarily for diversification and hedging.
What instruments to choose?
● Key investment vehicles
○ Gold ETFs: Highly liquid, easy to trade, with low fees (~0.5% annually), ideal for retail investors trading short-term or dollar-cost averaging.
○ Physical bars: Offer true "safe-haven" attributes, suitable as long-term ballast for family assets. Opt for investment-grade bars from banks or licensed dealers with buyback options, avoiding high-premium decorative gold.
○ Gold futures/stocks: Highly volatile and leveraged, not suitable for inexperienced or risk-averse investors.
● Key risks to watch
○ Short-term volatility: After rapid gains, gold may correct due to technical overbought conditions or sentiment shifts.
○ Policy reversals: If the Fed slows rate cuts or geopolitical risks unexpectedly ease, gold's appeal could weaken.
○ Rational decision-making: Never mortgage property or borrow to speculate on gold—such extreme leverage is dangerously reckless. Base decisions on personal financial capacity, not market euphoria.
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