I've been watching the gold market lately and noticed an interesting phenomenon—many people are still using the old-fashioned “hedge against inflation” to explain gold prices, but in reality the logic behind this rally has already changed.

To be honest, the core of gold’s price movement is no longer simply inflation or panic. Instead, it’s a deep adjustment taking place within the global credit system. Especially after the foreign exchange reserves freeze incident in 2022, central banks around the world began to realize a problem: the U.S. dollar is no longer the “absolute safe” asset it once was. As for gold? It has become the only thing that cannot be frozen unilaterally and does not rely on any sovereign credit. That’s the true long-term logic driving gold prices higher.

Just look at what central banks are doing. Last year, global net gold purchases exceeded 1,200 tons, marking the fourth consecutive year of surpassing the 1,000-ton mark. More importantly, 76% of central banks said they plan to increase their gold allocation over the next five years while reducing their dollar reserves. This isn’t short-term speculation—it’s central banks “voting with real gold.” Their confidence in the dollar is declining.

Of course, there are still many factors manufacturing short-term volatility. Uncertainty around tariffs, expectations that the Federal Reserve will cut rates, and geopolitical risks—these are pushing gold prices up while also creating sharp swings. Do you remember the big 18% pullback earlier this year? That was the market’s response to a rebound in real interest rates and easing of the crisis. But interestingly, each pullback has been treated as a buying opportunity, with the bottom each time higher than the last.

Now, when it comes to the future direction of gold prices, my view is this: during the remaining time in 2026, gold is more likely to trade in a high-range consolidation with an upward tilt, rather than rising in a straight line with no turning back. Banks’ forecasts differ quite a lot. Goldman Sachs has adjusted its year-end target price to 5,700 dollars, and even JPMorgan sees 6,300 dollars. But all of these are based on different assumptions about economic scenarios. If the economy truly slows down and interest rates keep moving downward, the probability of gold rising moderately is higher. However, if policy succeeds in boosting growth and the U.S. dollar strengthens, gold could also fall back.

For retail investors, there’s still an opportunity to participate now, but you need to think clearly about who you are. If you’re a short-term trader, the volatility around the release of U.S. market data is indeed a great opportunity—but you must set strict stop-losses. If you’re a beginner, don’t blindly chase higher prices; start with a small amount to test the waters. Learning to read the economic calendar is important. If you’re a long-term allocation investor, gold really is suitable as a diversification tool in an investment portfolio, but be mentally prepared to withstand a drawdown of more than 20%. After all, gold’s volatility isn’t lower than stocks.

My own view is that the trend of central banks buying gold has never truly stopped since it took off in 2022, and it won’t stop in 2026 either. Because sticky inflation, debt pressures, and geopolitical tensions are still there. The lower end of gold prices keeps getting built higher. In bear markets, the declines are limited, while in bull markets, the continuation strength is strong. But the key is that gold’s upward move is never a straight line—you need a systematic way to monitor these changes, not just follow the news blindly.

Go with the trend, figure out your position clearly, and then decide how to enter.