Gold prices break through $4000. Is it really time to enter now? How to choose the right investment timing?

Gold, as a traditional safe-haven asset, has launched a strong rally since October 2023, surging from $2,700 to the $4,000 mark within just 14 months. According to the latest survey of investment analysts by Reuters, the average annual price of gold in 2025 is expected to fluctuate around $3,400, with further upside potential near $4,275 in 2026.

In this historic rally, investors’ core concerns boil down to three questions: Is the current gold price overvalued? When is the best time to enter? Is every dip a buying opportunity?

This article will analyze the underlying logic behind the continuous rise in gold prices, assess its current investment value, and from both fundamental and technical perspectives accurately determine the gold investment timing, helping you establish a more scientific trading decision framework.

The Deep Drivers Behind the Record-Breaking Gold Surge

As a non-interest-bearing financial asset, gold prices are primarily driven by supply and demand. The fundamental cause of supply-demand imbalance is: investor confidence in traditional financial assets (fiat currencies, government bonds) has sharply declined, prompting a shift toward physical assets and alternatives.

This crisis of confidence mainly stems from three forces:

The Aftermath of the Global Monetary Easing Cycle

Since 2020, the US has launched unlimited quantitative easing, initially to address domestic liquidity shortages, but it exported high inflation globally. By 2022, the Federal Reserve abruptly began a aggressive rate hike cycle. This combination of policies—one easing, one tightening—directly led to: a significant devaluation of US and global debt, damage to the creditworthiness of the dollar and US Treasuries, and a rapid decline in investor attraction to cash assets. As a result, large capital flows shifted into gold and crypto assets.

The Collective Rise of Alternative Assets

Bitcoin has broken through the $100,000 level, and even former US President Trump publicly declared Bitcoin as a strategic reserve asset. The rising prices of these emerging alternatives send a signal: the dollar system is facing an unprecedented confidence test.

Especially as protectionist policies rise and geopolitical risks flare, countries’ reliance on the dollar decreases, and demand for safe assets (gold, crypto assets) surges.

The Reshaping of Basel III Regulations

The latest revision of global financial regulation standards reclassified gold as a Tier 1 capital (alongside government bonds, cash, etc.), whereas previously it was considered a lower-liquidity Tier 3 capital. This means banks can allocate gold with lower risk weights, directly incentivizing global financial institutions to significantly increase their gold holdings. Compared to endlessly printed and depreciating paper money, gold’s scarcity and extraction costs will only rise.

Is Now a Good Time to Buy Gold? Valuation and Risk Tips

Brief answer: Gold still has investment value, but it’s not an unconditional upward ride.

Under the backdrop of continued Fed easing and a weakening dollar, gold’s status as a Tier 1 asset will further solidify, supporting its long-term upward trend. But the key risks include:

1. Increasing competition, compressing upside potential

Gold now competes for investor funds with three main assets:

• Crypto assets like Bitcoin: far outpacing gold in gains, with higher volatility, attracting aggressive investors
• Government bonds: in a rate-cut environment, bond prices rebound, diverting funds
• US stocks: if the economy soft-lands, equities may steal the spotlight from risk assets

Based on last year’s performance, Bitcoin’s annual gains far exceeded gold, with much larger volatility. For conservative investors, gold remains a relatively stable choice, but its marginal attractiveness is declining.

2. Growth slowing, volatility possibly increasing

We expect gold to continue its upward trend, but at a noticeably slower pace, with short-term volatility rising. This is due to intensified competition from alternative assets and market demand differentiation.

3. Price already at high levels, chasing gains is risky

Gold has reached a historical high zone; further upside is diminishing. Blindly chasing high may result in buying at the top and suffering losses when prices fall back.

Precise Timing for Gold Investment: Dual Control of Technical and Fundamental Factors

To profit from gold, the key isn’t just “buying,” but “when to buy.” The best strategy combines market cycles, technical signals, and fundamental changes.

Fundamental considerations: wait for policy shifts

The timing of gold investment first depends on macro environment:

• Is the Fed’s easing cycle continuing? Continued rate cuts favor gold
• Are geopolitical risks escalating? Crisis escalation → risk aversion rises → increased gold demand
• Are global central banks increasing gold holdings? Central bank accumulation is a key support for gold prices

As long as these three factors do not undergo fundamental reversals, the medium-term trend for gold remains upward.

Precise technical entry: the lower Bollinger Band as a buy point

Technical analysis helps us pinpoint specific buy/sell levels, reducing blind trading risks. Currently, gold prices are still in a clear upward channel.

Application of Bollinger Bands: Comprising upper, middle, and lower bands, with gold price oscillating within. When prices touch the lower band, it often indicates short-term oversold conditions, making it a good entry point; when touching the upper band, caution is advised to avoid chasing highs.

Practical suggestions:

• When gold falls near the lower Bollinger Band → this is an ideal long-term entry zone
• When prices are above the middle band → short-term risk increases; consider waiting or reducing positions
• Combine technical with fundamental signals → when easing policies are strong + technical buy signals appear, the confidence level is highest

Dips are the best entry points

Gold prices do not rise in a straight line but in wave-like patterns. Every correction is an opportunity to accumulate positions. Historical experience shows that buying during upward channel corrections yields maximum profit with minimal risk.

Current strategy: Avoid chasing highs, wait for dips, enter at designated points.

Comparing Gold Investment Tools: Choosing the Lowest-Cost Path

Gold investment methods vary widely; selecting the right tool directly impacts returns. Common options each have pros and cons:

Physical gold (bars, jewelry)

Not recommended for individual investors. The reasons are simple: large bid-ask spreads, poor liquidity, high storage costs. From a pure investment perspective, cost-effectiveness is very low. Central banks hold physical gold due to their vaults and security systems, but individual investors lack these conditions.

Gold futures and options

Good liquidity, small spreads, but the fatal flaws are high account opening thresholds, strict margin requirements, and low capital efficiency. Options have nonlinear payoff profiles, making losses easy for ordinary investors. Both are unsuitable for non-professional traders.

CFD contracts (recommended)

Gold CFDs track spot gold prices and are leveraged derivatives, with clear advantages:

• Very simple trading (no need for frequent contract rollovers like futures)
• Flexible operations (long/short, set stop-loss/take-profit)
• Low costs (small spreads, low minimum deposit of around $50)
• Adjustable leverage (from 1x to multiple times, based on risk appetite)

For retail investors aiming to precisely grasp gold investment timing, CFDs offer the best cost-performance ratio.

Which Investors Are Suitable for Gold Allocation?

Gold’s role is unique—it’s both currency, commodity, and major asset class, making it valuable for:

• Central banks: combating inflation + strategic reserves. Gold has been tested for thousands of years as the ultimate credit asset.
• Institutional funds: essential in asset allocation. Gold’s low correlation with stocks and bonds helps smooth portfolio volatility and manage risk.
• Individual investors: diversification + inflation hedge. Moderate gold holdings can reduce overall risk and hedge currency depreciation.

Conclusion: All investor types are suitable for gold participation, but their purpose, time horizon, and tool choice differ. The key is to select the investment tool that best matches your capital size and risk preference.

Summary and Recommendations

Gold surged from $2,700 to $4,000, reflecting a profound crisis of confidence in the global monetary system. From a medium-term perspective, easing policies, central bank accumulation, and safe-haven demand remain supportive, and the upward trend continues.

But regarding current gold investment timing:

✓ Avoid chasing highs: prices are at historical highs, blindly following the trend is risky

✓ Wait for dips: every correction to the lower Bollinger Band is a better entry opportunity

✓ Allocate, not speculate: gold should serve as a stable foundation in a portfolio, not a quick-profit tool

✓ Choose the right tools: for individual investors, CFDs are more efficient than physical gold or futures

✓ Hold long-term if fundamentals remain: as long as easing, safe-haven demand, and central bank purchases persist, the long-term direction remains upward

In short, gold is worth investing in, but timing is more critical than the investment itself. When a systematic correction occurs, that will be the real buying opportunity.