Recently, I’ve been thinking about the true logic behind this wave of gold market rally, and I realize it’s much more complex than just surface-level inflation or hedging.

Honestly, the driving factors behind the gold bull market are never purely short-term. I noticed 2022 became a significant watershed—before that, the market linked gold prices directly to real interest rates and the US dollar trend, but afterward, factors like central bank gold purchases, geopolitical tensions, and tariff policies started to really take effect. What is the fundamental reason behind this? The three pillars of the US dollar credit system—economic productivity, military strength, and institutional credibility—began to shake. Especially when foreign exchange reserves were frozen in 2022, it broke an old contract: sovereign assets are safe. Gold is important because it cannot be unilaterally frozen and does not rely on any sovereign credit.

Looking at the current drivers, it’s clear. First, the long-term adjustment of confidence in the US dollar is still ongoing. The US fiscal deficit is widening, debt disputes are frequent, and de-dollarization trends are obvious. Capital is continuously shifting from dollar assets to hard assets, and this is not a short-term phenomenon. Second, central banks worldwide have continued to increase gold holdings, surpassing 1,000 tons for the fourth consecutive year, with net purchases exceeding 1,200 tons in 2025. According to the World Gold Council, 76% of surveyed central banks believe their gold reserves will moderately or significantly increase over the next five years, while most expect the proportion of dollar reserves to decline. This is a key structural force supporting gold prices.

Of course, short-term volatility is also intense. Uncertainty around trade protectionism and tariff policies directly triggered the rally in 2025, as market uncertainty increased, capital flowed into safe-haven assets. Expectations of Fed rate cuts also pushed gold prices higher because lower interest rates reduce the opportunity cost of holding gold. Geopolitical risks continue to support— as long as global conflicts and sanctions persist, gold will be hard to detach from its safe-haven premium.

In addition, there are several easily overlooked factors. Global debt has reached $307 trillion, and high debt levels mean countries’ interest rate policy flexibility is limited. Monetary policy may lean more toward easing, indirectly boosting gold’s attractiveness. The stock market is already at historic highs, with few leading stocks, increasing concentration risk in portfolios. This doesn’t mean a stock market correction is imminent, but once disappointment hits, the consequences could be severe. Many people hold gold for portfolio stability. Media and social media hype also drive short-term capital inflows, with continuous reports and emotional narratives leading to large amounts of capital flowing in regardless of cost. There’s also investor preference for flexible trading—no longer satisfied with static allocations, they want to dynamically adjust, which boosts interest in trading tools like XAU/USD, increasing liquidity and responsiveness, but also making gold prices react faster to macro signals.

After understanding the logic behind gold price increases, how do we judge the current position? I see three coordinate systems. First, production costs—the total sustaining cost of global mining sets the hard floor for prices. Second, historical percentiles—the current real gold price has broken through the nominal high of history, but after deducting inflation, the real gold price still lags behind the 1980 peak, leaving room for long-term upside. Third, central bank gold purchases—tracking the behavior changes of major gold-buying countries like China and India is key to assessing whether structural premiums are waning.

What about the outlook for 2026? Most institutions believe gold remains bullish, but forecasts vary widely. The World Gold Council mentions that if economic growth slows and interest rates further decline, gold could see moderate gains; but if policies successfully boost growth and the dollar strengthens, gold prices could fall back. In other words, 2026’s gold price is more likely to be characterized by high-level oscillation with an upward bias, rather than a relentless upward trend.

Based on institutional forecasts, the average price expectation for 2026 is between $4,800 and $5,200 per ounce, with a baseline year-end target of $5,400 to $5,800, and an optimistic scenario of $6,000 to $6,500. Goldman Sachs raised its year-end target from $5,400 to $5,700, citing ongoing central bank purchases and Fed rate cut expectations. JPMorgan expects $6,300 in Q4. Citibank’s average yield expectation for the second half is $5,800. UBS projects an average price of $5,000 for the year. All these forecasts point in one direction: the upward trend in gold prices will continue.

My straightforward view: central bank gold buying reflects a long-term skepticism of the dollar system. This trend won’t suddenly disappear by 2026, because inflation remains sticky, debt pressures persist, and geopolitical tensions continue. The gold price bottom keeps rising, with limited downside in bear markets and strong momentum in bull markets. But remember, gold’s rise is never a straight line. In 2025, it retraced 10-15% due to Fed policy adjustments, and in early 2026, when real interest rates rebounded and crises eased, there was a sharp 18% correction, with high volatility. The key is whether you have a systematic way to monitor it, rather than blindly chasing news.

Is it still a good time to buy gold now? My advice depends on your positioning. If you’re an experienced short-term trader, the volatility will present excellent opportunities, especially around US market data releases, where fluctuations tend to amplify. But be sure to set strict stop-losses. If you’re a novice trying to catch recent swings, start with small amounts, don’t blindly add positions, and learn to use economic calendars to track US economic data releases. If you’re a long-term investor, gold is suitable as a diversification tool in your portfolio, but be prepared for a drawdown of over 20%. Don’t put all your assets into it. If you want to maximize returns and have experience, consider a combined long-term core position with short-term tactical trades—hold the core long-term, and use volatility for short-term gains.

A few points to emphasize. Gold price volatility is not less than stocks; gold’s annual average amplitude is 19.4%, while the S&P 500’s is 14.7%. Gold’s cycle is very long—you can achieve value preservation over 10+ years, but it can double or halve in the meantime. Physical gold trading costs are relatively high, generally 5%-20%, and frequent trading can eat into profits. For swing trading, consider more liquid options like gold ETFs or XAU/USD. For Taiwanese investors, foreign currency-denominated gold also involves USD/TWD exchange rate fluctuations, which can impact returns.

Follow the trend, clarify your position—short-term, long-term, or allocation—and then decide your entry approach. This is much more important than trying to predict short-term price movements.