Lately, I've been focusing on this wave of gold price rally and want to organize my observations.

On the surface, analyzing gold price movements involves the logic of interest rate cuts, inflation, and geopolitical risks, but what’s truly worth deep thinking is the bigger underlying issue—the cracks in the global credit system.

The 2022 event of foreign exchange reserves being frozen had a huge impact on market psychology, though many may not realize it. Since then, the role of gold has changed; it’s no longer just a tool against inflation but has become a long-term insurance for the entire fiat currency credit system. Recent central bank actions are clear evidence—last year, global central banks net purchased over 1,200 tons of gold, marking the fourth consecutive year surpassing a thousand tons. This isn’t short-term speculation but a structural signal.

I’ve noticed that the driving forces behind this rally can be divided into two categories. One is the slow-moving variables, the long-term factors that set the bottom for gold prices. Trust in the dollar has been declining over the long term, and central banks around the world are adjusting their reserve structures, with a significant increase in gold allocation expected over the next five years. These aren’t things that can be reversed in a month or two.

The other category is the fast-moving variables, which create short-term volatility. Uncertainty around tariffs, expectations of Fed rate cuts, geopolitical risks, and recent months’ concentrated stock market risks—all are pushing up the risk premium for gold. Especially the 18% correction earlier this year—it looked scary, but from a long-term perspective, it’s just normal volatility.

Honestly, there are indeed opportunities to participate in the gold price trend now, but it depends on what type of investor you are. If you’re a short-term trader, the volatility around U.S. market data releases is your stage—liquidity is good, and the direction is relatively easier to judge. But you must set strict stop-losses; don’t let one mistake ruin your entire plan.

If you’re a beginner, my advice is four words: small amounts to test the waters. Don’t blindly increase your position just because prices are rising continuously. Gold’s average annual amplitude is 19.4%, which isn’t much milder than stocks. Once your mindset collapses, it’s easy to make money-losing decisions.

Long-term allocators should understand that gold is indeed a good tool for diversification, but only if you can tolerate a 20%+ drawdown. Don’t put all your assets into it; the intermediate fluctuations can drive you crazy.

Finally, let’s talk about how institutions view 2026. Goldman Sachs has raised its year-end target from $5,400 to $5,700, and JPMorgan expects it to reach $6,300 in Q4. The logic behind these forecasts points to the same direction—central banks continuing to buy gold, the Fed cutting rates, and a surge in safe-haven demand. But note that these forecasts are not one-way; if policies successfully boost growth and the dollar strengthens, gold prices could also fall back.

Ultimately, instead of obsessing over how high it will go in the short term, ask yourself one question: why are you buying gold? Is it for short-term trading? long-term preservation? or portfolio hedging? Clarify this first, then decide how to participate, so you won’t be carried away by market noise. The essence of this gold bull market is long-term hedging against systemic risks, and this demand won’t disappear in the short term.