Recently, I’ve read a lot of discussions about the sharp surge in gold, and I found that many people still haven’t actually figured out the logic behind it. I’ve put together a framework of my own and I want to share it with everyone.

Why is gold rising so aggressively this time? On the surface, it looks like expectations of interest-rate cuts, geopolitical risks, and inflation pressure—but if you go deeper, the real driving force is actually long-term doubt about the global credit system. The 2022 foreign-exchange reserve freeze incident shattered many people’s confidence in the U.S. dollar system. Since then, central banks’ buying of gold has never truly stopped.

According to data from the World Gold Council, in 2025, global central banks’ net gold purchases exceeded 1,200 tons, marking the fourth consecutive year of surpassing the 1,000-ton mark. Even more importantly, 76% of surveyed central banks believe they will increase the proportion of gold reserves over the next five years, while also expecting the proportion of dollar reserves to decline. This is not short-term speculation, but a structural long-term shift. Behind the surge in gold prices is the continued support from central bank gold buying.

In addition to central banks, there are a few other forces driving the momentum. The expansion of the U.S. fiscal deficit, the de-dollarization trend, and uncertainty around tariff policies are all pushing capital to move from dollar assets into hard assets. Combined with expectations of interest-rate cuts from the Fed, this will further reduce the opportunity cost of holding gold. Geopolitical risk is also still there—so long as global conflicts and sanctions exist, it’s hard for gold to fully shed its safe-haven premium.

From the data, global total debt has already reached $307 trillion, which means that countries’ ability to adjust their interest-rate policies is constrained, and monetary policy may be more inclined toward easing. Stock markets are also already at historical highs, and the growing concentration risk faced by investment portfolios is prompting many people to allocate to gold as a diversification tool. In the short term, media attention and social sentiment are also driving capital inflows, intensifying the situation of gold’s rally.

So, can you still buy now? My view is that opportunity is still there, but it depends on what role you are in. If you’re an experienced short-term trader, there are indeed opportunities amid the volatility—especially around U.S. data releases in the U.S. session, when swings tend to become more pronounced. But if you’re a beginner, I recommend starting with a small amount to test the waters rather than blindly chasing after big gains. Use the economic calendar to track the timing of U.S. data releases—this can help you make decisions.

Long-term allocators should be mentally prepared to withstand a pullback of 20% or more. Gold’s volatility is not necessarily lower than that of stocks. In 2025, there was a pullback of 10–15% due to adjustments in Fed policy expectations, and at the start of 2026 there was also an 18% sharp correction. Volatility is indeed intense. So don’t put all of your net worth into gold; diversification is safer.

If you want to maximize returns, you can consider a combination of long and short strategies: hold a core position long-term, and use satellite positions to trade short-term based on volatility. But this requires relatively strong risk-control ability. The transaction costs for physical gold are high (5–20%), and frequent trading can eat up a large portion of profits. So for swing trading, more liquid tools such as gold ETFs or XAU/USD are likely to be more suitable.

As for the outlook for 2026, predictions from major institutions differ quite a lot. The consensus is that the average annual price will be between $4,800 and $5,200, the year-end target is $5,400 to $5,800, and in optimistic scenarios it can reach $6,000 to $6,500. Goldman Sachs raised its year-end target from $5,400 to $5,700. JPMorgan expects it to reach $6,300 in Q4. UBS expects an annual average price of $5,000. If the geopolitical crisis escalates or the dollar depreciates sharply, some institutions believe gold has the potential to reach the $6,500 to $7,200 range.

However, note that these forecasts do not represent a single predetermined path. If the economy slows and interest rates fall further, gold may rise moderately; conversely, if policies successfully boost growth and the dollar strengthens, gold prices could retreat. Therefore, in 2026, it’s more like high-level consolidation with an upward tilt, rather than an uninterrupted, one-way rally with no turning back.

My core view is that central banks buying gold represents long-term skepticism about the U.S. dollar system. This trend will not suddenly disappear in 2026, because sticky inflation, debt pressure, and geopolitical tensions all still exist. The gold price floor is getting higher and higher—bear markets may have limited downside, while bull markets have strong continuation. But the key is to have a system in place to monitor it, not to follow the news blindly. Build a clear analytical framework, think through your own positioning, and decide how you want to enter the market—this matters far more than predicting short-term prices.