I've been thinking about the reasons behind gold price fluctuations recently, and I realize that this round of market movement is much more complex than just surface-level inflation or safe-haven demand.

After reviewing many analyses, I understand that what truly drives up gold prices is a deep skepticism toward the US dollar credit system. The foreign exchange freeze event in 2022 directly shook the foundation of sovereign asset security. Since then, central banks worldwide have not stopped their gold purchases. WGC data shows that by 2025, global central banks will have net purchased over 1,200 tons of gold, marking the fourth consecutive year exceeding 1,000 tons, and 76% of surveyed central banks expect to increase their gold holdings and reduce dollar reserves over the next five years. This is not a short-term phenomenon; it’s a structural, long-term shift.

Besides the central bank influence, I’ve noticed several other factors contributing. The US fiscal deficit continues to expand, with global debt reaching $307 trillion. This limits countries’ interest rate policy flexibility, leading to accommodative monetary policies, which suppress real interest rates and make gold more attractive. Coupled with trade protectionism and geopolitical tensions, market uncertainty is rising, naturally driving funds toward safe-haven assets.

But what I want to emphasize is that the reasons for gold’s rise and fall are not just macro factors. Continuous media coverage and social sentiment hype have caused a large influx of short-term capital without regard for costs, creating a sustained upward trend. Additionally, investors are increasingly favoring flexible trading, with strong interest in tools like XAU/USD. Liquidity has improved, price responsiveness has quickened, resulting in more volatility.

From institutional forecasts, gold remains bullish in 2026, but opinions vary. Goldman Sachs has raised its year-end target to $5,700, JPMorgan expects $6,300 in Q4, and UBS sees a mid-year target of $6,200. In optimistic scenarios, Societe Generale and Wells Fargo predict gold could surge to $6,500–$7,200, but all depends on geopolitical developments and dollar trends.

Honestly, can you still participate now? I think there are opportunities, but it depends on your positioning. If you’re a short-term trader, the volatility around US market data releases offers many trading opportunities, but strict stop-losses are essential. If you’re a beginner, start with small amounts, don’t blindly add positions—mindset is crucial. If you’re a long-term investor, gold is indeed suitable as a diversification tool in your portfolio, but be prepared to withstand a 20% or more correction.

A detail to remind Taiwanese investors: gold priced in foreign currencies also depends on USD/TWD exchange rate fluctuations, which can affect your final returns. Additionally, physical gold trading costs can be as high as 5–20%, and frequent trading can eat into profits. Gold ETFs or XAU/USD liquidity are better options.

The core logic behind this gold bull market is that the global credit system has developed cracks. Central bank gold purchases reflect long-term doubts about the US dollar. This trend won’t suddenly disappear, as inflation remains sticky, debt pressures persist, and geopolitical tensions continue. The bottom is getting higher, with limited downside in bear markets and strong momentum in bull markets. But be aware that gold’s rise is never a straight line; in 2025, it retraced 10–15%, and early 2026 saw an 18% sharp correction, with intense volatility. The key is whether you’ve built a system to monitor these movements, rather than just chasing news blindly.

Think carefully about your positioning before deciding how to enter the market—being systematic is much more reliable than blindly following the crowd.