Recently, I have read a lot of discussions about gold and found that many people still simply attribute the rise in gold prices to rate cuts or inflation, but the underlying logic is much more complex.

My understanding is that the true driver of this gold bull market fundamentally stems from the global long-term skepticism of the U.S. dollar credit system. After the incident in 2022 when foreign exchange reserves were frozen, central banks around the world began to realize that gold is the asset that cannot be unilaterally frozen. WGC data clearly illustrates this—by 2025, global central banks' net gold purchases will exceed 1,200 tons, marking the fourth consecutive year of over 1,000 tons, and among surveyed central banks, 76% expect to increase their gold holdings over the next five years. This is not short-term speculation; it’s a structural shift in asset allocation.

Of course, short-term volatility still has many catalysts. Trade protectionism, Federal Reserve rate cut expectations, geopolitical tensions—these factors create numerous trading opportunities and also carry risks. I noticed that since March this year, gold prices have retraced 18%, and by May, they rebounded again. This volatility affects different types of investors in completely different ways.

Regarding investment methods, there’s a question I often get asked—Is it worthwhile to buy small gold bars? Honestly, the transaction costs for physical gold can be as high as 5-20%, plus storage and transportation costs. Frequent trading can eat up a large portion of profits. If you want to do swing trading, liquidity in XAU/USD or gold ETFs is better, and costs are lower. Small gold bars are more suitable for long-term preservation of value; if you can accept the costs, think of them as a savings jar.

From institutional forecasts, the target price range by the end of 2026 is between $5,400 and $5,800, with an optimistic scenario reaching $6,000–$6,500. Goldman Sachs has raised its target to $5,700, and JPMorgan even predicts it could reach $6,300 in Q4. But these forecasts are based on different assumptions—central bank buying, rate cut expectations, escalating geopolitical crises—each factor could change the outcome.

My view is that by 2026, gold prices are more likely to fluctuate at high levels with an upward bias rather than rising straight up. The trend of central bank gold purchases has not truly stopped since exploding in 2022, which means the bottom for gold is continuously being raised. But be prepared—gold’s average annual volatility is 19.4%, even more than stocks, with potential for doubling or halving in a year.

If you are a beginner and still want to participate now, my advice is to start with small amounts to test the waters, learn to read economic calendars, and track U.S. data release timings. Short-term traders can seize volatility opportunities around non-farm payrolls, CPI, and FOMC meetings, but be sure to set a 1-2% stop-loss. Long-term investors should treat gold as a diversification tool in their portfolio, but be mentally prepared for a 20%+ correction.

Most importantly, clarify your position before entering. Do you want to do short-term swing trading, long-term allocation, or a core-satellite strategy? Different choices require completely different operational approaches. Don’t blindly follow the trend; systematically monitor market changes—this is much more reliable than chasing news.