I’ve been thinking about this recent gold market rally. To be honest, I’ve read too many analyses, but most people only see surface factors like rate cuts and inflation, while overlooking deeper issues.

Why is gold continuing to rise? My take is that this is absolutely not a short-term phenomenon. The 2022 foreign exchange reserve freeze incident genuinely shook many people’s confidence in the U.S. dollar. Since then, the global central bank trend of buying gold has not really stopped. In 2025, the net amount of gold purchased by central banks worldwide exceeded 1,200 tons and has broken 1,000 tons for four consecutive years. This isn’t a coincidence—it’s a systemic structural change.

I’ve paid particular attention to a survey by the World Gold Council, which shows that 76% of central banks believe they will increase their gold allocation over the next five years while reducing their dollar reserves. What does that mean? It means the world’s long-term doubts about the U.S. dollar system, and gold has become the best tool to hedge this kind of systemic risk.

Of course, there are also plenty of factors driving short-term fluctuations. Trade protectionism, geopolitical tensions, and expectations for Fed rate cuts are all pushing up the gold price. But if you ask me, these are only catalysts—the real underlying logic lies in cracks in the credit system. Global debt has already reached $307 trillion, policy flexibility is constrained for many countries, and monetary easing has become the inevitable choice—which is always bullish for gold.

As for gold price forecasts, market opinions are indeed very divided. As of mid-May, consensus forecasts suggest that the average price in 2026 will be between $4,800 and $5,200 per ounce, and the year-end target will be between $5,400 and $5,800. But Goldman Sachs has raised its year-end target to $5,700, and JPMorgan even expects it to reach $6,300 in the fourth quarter, citing continued central bank buying and an escalation of geopolitical crises. UBS, meanwhile, believes this pullback is a buying opportunity, setting a mid-year target of $6,200.

Honestly, the fact that these forecast ranges are so wide actually reflects the market’s uncertainty about the future. The World Gold Council has also said that 2026 is more like “high-level oscillation with an upward bias,” rather than a one-way rally. If the economy slows down and interest rates keep falling, gold may rise moderately; but if policy successfully stimulates growth and the dollar strengthens, the gold price could also fall.

Is it still possible to buy gold now? I think there’s still an opportunity, but the prerequisite is to think clearly about your own positioning. If you’re a short-term trader, the volatility around U.S. market data releases does offer quite a few opportunities, but you must set strict stop-losses. In 2025, there was a pullback of 10–15% due to adjustments in Fed policy, and earlier this year, when real interest rates rebounded, the market even pulled back sharply by 18%. This kind of volatility is a test of psychological resilience.

If you’re a beginner, my suggestion is to start by putting in a small amount to test the waters. Don’t blindly chase after highs—learn to read the economic calendar and track the timing of U.S. economic data releases. This can help you make more rational decisions. Gold’s average annual trading range is 19.4%, which is even larger than the S&P 500, so you need to be mentally prepared.

Long-term allocators who treat gold as a diversification tool for an investment portfolio are right to do so, but you should be psychologically prepared to withstand drawdowns of more than 20%. I’ve seen many people get scared out by the intermediate fluctuations, and as a result they end up losing money. Truly knowledgeable investors use a combination strategy—holding the core position long-term, while making short-term trades with the satellite position during periods when volatility is clearly higher, especially around U.S. data releases.

A few things to keep in mind: transaction costs for physical gold are too high—generally 5–20%—and frequent trading can eat up a large portion of your profits. If you want to do swing trades, gold ETFs or instruments like XAU/USD generally have better liquidity. Also, gold cycles are very long. If you buy it for value preservation, you need to think in terms of 10 years or more—but in between, it could potentially double, or it could be cut in half. That was exactly what happened from 2011 to 2015.

Regarding gold price forecasts, my view is not to overly trust institutional predictions. The key is to build your own analytical framework and monitor indicators such as central banks’ gold-buying trends, changes in real interest rates, and geopolitical risk—these are the metrics that reveal the underlying logic. Gold’s rally has never been a straight line, but as long as global debt pressures, sticky inflation, and geopolitical tensions remain, gold’s long-term hedging value won’t disappear. Follow the trend, clarify your positioning, and then decide how to enter.