Recently, the performance of gold has indeed been worth careful analysis. Many people ask me how I view the rise and fall of gold; in fact, the underlying logic is much more complex than simply inflation or hedging.

What truly drives this round of gold bull market, in the end, is the cracking of the global credit system. The event in 2022 where foreign exchange reserves were frozen shook a fundamental belief—are dollar assets really safe? Since then, market confidence in the dollar has started to change. Gold is no longer just a tool to combat inflation but has become a long-term hedge against the entire monetary credit system.

Just look at the actions of central banks. According to the World Gold Council, in 2025, global central banks net purchased over 1,200 tons of gold, surpassing 1,000 tons for the fourth consecutive year. More importantly, 76% of surveyed central banks expect to increase their gold holdings over the next five years while reducing dollar reserves. This is not short-term speculation but a structural asset reallocation quietly taking place among countries. This shift in attitude directly determines that the gold bottom continues to be pushed higher.

Of course, how to interpret gold price movements also requires considering short-term volatility factors. Uncertainty in tariffs in 2025, expectations of Fed rate cuts, geopolitical tensions—all these create obvious safe-haven demand. I notice that before and after each U.S. economic data release, gold price fluctuations tend to amplify significantly. But be aware, these short-term swings often tempt blind chasing, especially when media reports and social media hype fuel the trend.

From a data perspective, global debt has reached $307 trillion, and the room for interest rate policy adjustments in various countries is severely limited, meaning future monetary policy will likely remain accommodative. In an environment of continuously declining real interest rates, gold’s attractiveness naturally increases. Plus, since the stock market is already at historical highs, many investors are starting to use gold to balance portfolio risk, which also supports ongoing demand for gold.

Regarding how to view gold price movements, I think the most important thing is to establish a clear analytical framework. First, look at production costs; the maintenance costs of global mining set a hard floor for prices. Second, observe central bank actions; continuously tracking each country’s gold purchase data can help determine whether structural premiums are diminishing. Lastly, examine the relationship between actual gold prices and historical levels—current nominal highs have broken through, but after adjusting for inflation, they are still far from the 1980 peak, providing room for long-term upside.

Is it still possible to enter now? My view depends on your positioning. If you are an experienced short-term trader, the volatile market indeed offers many trading opportunities, especially around non-farm payrolls, CPI, FOMC releases, when volatility tends to spike. But be sure to set strict stop-losses; controlling risk within 1-2% is crucial.

If you are a beginner, I recommend starting with small amounts to test the waters—do not blindly increase your position. Learn to read economic calendars and track U.S. economic data release timings, which can assist your trading decisions. The annual average amplitude of gold is 19.4%, higher than the S&P 500’s 14.7%, so be psychologically prepared.

If you are a long-term investor, gold is indeed suitable as a diversification tool in your portfolio, but be prepared for a drawdown of over 20%. In 2025, due to expectations of Fed policy adjustments, there was a 10-15% correction, and early 2026 saw a sharp 18% pullback. Physical gold trading costs can be as high as 5-20%, and frequent trading can eat into profits, so considering gold ETFs or XAU/USD and other more liquid instruments might be more appropriate.

Experienced investors can try a long-short combined strategy—holding core positions long-term while using volatility for short-term trades—this way, you can participate in the long-term upward trend while profiting from short-term fluctuations.

From institutional forecasts, gold remains bullish in 2026. Goldman Sachs raised its year-end target from $5,400 to $5,700, citing ongoing central bank buying and rate cut expectations. JPMorgan expects $6,300 in Q4. UBS’s full-year average price forecast is $5,000, with a mid-year target of $6,200. The World Gold Council’s participants currently estimate an annual average price of about $5,100. But note, these forecasts vary widely; consensus predicts an average price in 2026 between $4,800 and $5,200, with year-end targets between $5,400 and $5,800. In optimistic scenarios, it could reach $6,000 to $6,500. If geopolitical crises escalate or the dollar depreciates sharply, it could even surge to $6,500–$7,200.

However, this does not mean gold prices will rise endlessly without pause. 2026 is more likely to be a high-level consolidation with an upward bias rather than a one-way rally. Economic growth slowdown and further rate declines will push gold higher, but if policies succeed in boosting growth and the dollar strengthens, gold could also retreat.

Ultimately, the key to understanding gold price movements still lies in grasping the structural factors behind them. The central bank gold-buying trend has not truly stopped since exploding in 2022, as inflation remains sticky, debt pressures persist, and geopolitical tensions continue. The gold bottom keeps rising, with limited downside in bear markets and strong momentum in bull markets. But remember, the rally is never a straight line; it requires systematic monitoring rather than following news blindly. Go with the trend, clarify your positioning, and then decide how to enter.