Recently, I noticed a very interesting phenomenon— the entire market's perception of gold is undergoing a profound shift. It is no longer just a simple inflation hedge but has evolved into a counterbalance to the entire credit system. The logic behind this shift is worth analyzing carefully.

Honestly, 2022 was a watershed year. Before that, people mainly judged gold prices based on real interest rates and the dollar's trend. But after that, factors like central bank gold purchases, geopolitical tensions, and tariff policies began to play a bigger role. Most importantly— the event of foreign exchange reserves being frozen that year shook the fundamental contract of sovereign asset security. The reason gold is attractive is that it cannot be unilaterally frozen and does not rely on any sovereign credit.

From a driving force perspective, some are long-term structural factors, and some are short-term volatility factors. In the long run, trust in the dollar is adjusting, and central banks around the world are continuously increasing their gold holdings— by 2025, the net global central bank gold purchases will exceed 1,200 tons, marking the fourth consecutive year surpassing a thousand tons. According to the World Gold Council, 76% of central banks believe they will increase their gold reserves over the next five years, while also expecting the dollar's reserve ratio to decline. This is not a temporary trend but a genuine structural change.

Short-term volatility is mainly driven by uncertainties in trade protectionism, expectations of Federal Reserve rate cuts, and geopolitical risks. Every time U.S. market data (non-farm payrolls, CPI, FOMC) is released, the price swings tend to amplify significantly. Another point that is often overlooked— global debt has already reached $307 trillion, which means that countries' monetary policy flexibility is limited. Monetary policy is more inclined toward easing, with real interest rates suppressed, indirectly boosting gold's attractiveness.

Coupled with the stock market already at historical highs, the concentration risk in investment portfolios is increasing. Many investors hold gold to stabilize their portfolios. Media reports and social media buzz are also driving short-term capital inflows, leading to continuous upward momentum. Moreover, more investors are no longer satisfied with static allocations and are turning to more flexible trading methods; interest in tools like XAU/USD is also rising.

So, can you still jump on the train now? The answer is yes, but it depends on your positioning. If you are an experienced short-term trader, the volatility provides opportunities, especially around U.S. market data releases, where fluctuations are more pronounced. But be sure to set strict stop-losses, recommending a risk control of 1-2%.

If you are a beginner looking to catch recent volatility, my simple advice is— start with small amounts to test the waters, and avoid blindly increasing your position. Learn to use economic calendars and track U.S. economic data release timings, which can greatly assist your trading decisions.

If you are a long-term investor, gold indeed makes a good diversification tool for your portfolio, but be prepared to endure a drawdown of over 20%. Gold's volatility is actually not lower than stocks— with an average annual amplitude of 19.4%, compared to the S&P 500's 14.7%. Also, gold's cycle is very long; you might see your investment double or get cut in half (like from 2011 to 2015).

Another very important point— physical gold trading costs are high, generally 5-20%. Frequent trading can eat up a large portion of profits. If you want to do swing trading, tools with better liquidity like gold ETFs or XAU/USD are more suitable.

Regarding the price movement forecast for 2026, opinions among institutions vary quite a bit. The World Gold Council projects an average price of $4,800 to $5,200 per ounce, with year-end targets of $5,400 to $5,800, and an optimistic scenario even reaching $6,000 to $6,500. Goldman Sachs has raised its year-end target from $5,400 to $5,700, JPMorgan expects $6,300 in Q4, Citibank's average yield for the second half is $5,800, and UBS's full-year average is $5,000.

But these forecasts do not represent a single path; rather, multiple possibilities. If economic growth slows and interest rates further decline, gold may gently rise; but if policies succeed in boosting growth and the dollar strengthens, gold prices could fall back. In other words, the 2026 gold price is more like a high-level oscillation with an upward bias rather than a one-way unstoppable rally.

My view is that the trend of central bank gold buying has not truly stopped since it exploded in 2022. This trend will not suddenly disappear in 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 rally has never been a straight line. In 2025, it retraced 10-15% due to Federal Reserve policy adjustments; early 2026, when real interest rates rebounded and crises eased, there was even an 18% sharp correction, with intense volatility.

The key is whether you have established a system to monitor these factors, rather than just following news trends. Think carefully about your positioning (short-term, long-term, or allocation) before deciding how to enter. This is more important than short-term price predictions.