I've been watching the gold market trend recently and noticed that many people are still chasing the rally. In fact, the underlying logic is worth reviewing carefully.

Gold's rise isn't simply due to inflation or panic, but because cracks have appeared in the dollar's credit system itself. The foreign exchange reserve freeze event in 2022 completely changed the market's perception of the safety of sovereign assets. Since then, gold has evolved from a simple inflation hedge into a comprehensive safe-haven asset against geopolitical risks, fiscal pressures, and currency credit doubts.

Looking at what central banks are doing makes this clear. According to the World Gold Council, in 2025, global central banks' net gold purchases exceeded 1,200 tons, marking the fourth consecutive year surpassing 1,000 tons. More importantly, 76% of surveyed central banks expect to increase their gold holdings over the next five years, while also anticipating a decline in dollar reserves. This isn't short-term speculation but a long-term structural adjustment of the global financial system.

Of course, short-term volatility is also intense. Trade protectionism, Federal Reserve rate cut expectations, geopolitical risks—these factors take turns, causing gold prices to fluctuate at high levels. My observation is that the real influence on the trend isn't the policy announcements themselves, but unexpected signals like "whether the rate cut pace is faster than expected."

Honestly, since early 2025, gold has experienced several dips. Since March, it retraced 18%, and when real interest rates rebounded in early May, it dipped again. The volatility isn't much lower than stocks. The average annual amplitude is 19.4%, which says everything.

Can you still buy now? My view depends on your positioning. If you're a short-term trader, there are obvious opportunities around U.S. market data releases, but you must set strict 1-2% stop-losses and avoid blindly chasing highs. Beginners are most likely to buy at high levels and then sell in a loss during pullbacks, repeatedly losing money.

For long-term investors, gold is suitable as a diversification tool in a portfolio, but be mentally prepared for a 20% or more correction. Don't put all your assets into it; diversification is key. Experienced investors might consider a combination of long-term core holdings and short-term trading on volatility, but this requires strong risk control skills.

Regarding forecasts for 2026, major institutions generally agree on a sideways trend with an upward bias. Goldman Sachs has adjusted its year-end target to $5,700, JPMorgan expects $6,300 in Q4, and UBS gives an average price of $5,000 for the year. But these forecasts all assume that—if a recession occurs, geopolitical crises escalate, or the dollar depreciates sharply—gold could surge to $6,500–$7,200. Conversely, if policies successfully boost growth and the dollar strengthens, gold prices could fall back.

Finally, I want to say that gold's rally has never been a straight line. In 2025, due to Fed policy expectation adjustments, it retraced 10-15%, and earlier this year, it experienced an 18% sharp correction. The key is whether you've built a clear analytical framework to monitor these changes, rather than blindly chasing news. Central banks continue to buy, global debt remains high, and the shrinking tolerance for stock market errors—all these structural factors are supporting higher gold floors. But volatility will continue—that's the game.

Clarify your positioning first, then decide how to enter the market—this is much more important than blindly following the crowd.