Lately I've been watching the trend of the international gold index, and it's quite interesting.

Many people are still debating whether gold prices have already peaked, but I think the question is asked backwards. The real question should be, why has gold never truly stopped being bought since 2022?

Think carefully, the driving force behind this bull market isn't just simple inflation or panic. It's actually something deeper — cracks in the global credit system itself. From the moment foreign exchange reserves were frozen in 2022, the assumption of sovereign asset security was shattered. The reason gold continues to attract central banks to increase their holdings is, in essence, a long-term skepticism of the dollar system.

According to data from the World Gold Council, last year, global central banks net purchased over 1,200 tons of gold, marking the fourth consecutive year exceeding a thousand tons. More importantly, 76% of surveyed central banks believe they will significantly increase their gold holdings over the next five years. This isn't short-term speculation; it's a structural shift in asset allocation.

So why has the international gold index remained high? Because the bottom has been supported higher and higher by central bank buying. Of course, there have been fluctuations — earlier this year, when real interest rates rebounded and crises eased, gold prices experienced a sharp correction of 18%. But the key point is, that correction didn't break through last year's support levels.

The forces driving gold prices are quite clear. On one side, there are structural factors: declining confidence in the dollar, de-dollarization trends, and central bank accumulation. On the other side, cyclical fluctuations: tariff policy uncertainties, rate cut expectations, geopolitical risks. The Fed's rate cut pace, US-China trade tensions, Middle East tensions — all can cause short-term volatility of 5-10% or even more.

Looking ahead to 2026, most institutions have reached a consensus — year-end target prices between $5,400 and $5,800, with optimistic scenarios even reaching $6,000 to $6,500. Goldman Sachs, JPMorgan Chase, and Citibank have all raised their forecasts, mainly citing ongoing central bank purchases, ETF capital inflows, and escalating geopolitical crises.

But there's an important point to understand: gold's rally has never been a straight line. This move will likely be characterized by high-level oscillations with an upward bias, not a relentless one-way rally. So if you want to participate, you need to think carefully about your positioning.

Short-term traders have opportunities, especially around US economic data releases, when volatility tends to spike. Using technical analysis well can help you catch the wave. But be sure to set strict stop-losses — risking only 1-2% per trade is enough.

For beginners, I recommend starting small — don't blindly add more. Learn to read economic calendars and track US data release timings, which can help you make better decisions.

Long-term investors should be mentally prepared: gold's volatility isn't necessarily lower than stocks, with an average annual amplitude of 19.4%. You need to consider whether you can tolerate drawdowns of over 20%. Don't put all your assets into gold; diversification is safer.

If you have experience, consider a hybrid approach — hold a core position long-term, and use volatility for short-term trades with satellite positions. Especially around key data releases, there are many trading opportunities. But this requires strong risk management skills.

A few reminders: physical gold trading costs are high, sometimes 5-20%, and frequent trading can eat into profits significantly. If you want to swing trade, gold ETFs or tools like XAU/USD offer better liquidity.

Ultimately, the current gold market is a game of "knowing who you are, then deciding how to enter." The trend of central bank gold buying won't change due to short-term fluctuations. Inflation remains sticky, debt pressures persist, and geopolitical tensions are still there. The bottom of the international gold index is supported higher and higher, with limited downside in a bear market and strong continuation potential in a bull market. But you need a systematic approach to monitor the market, not just follow news blindly.