Recently, I’ve read a lot of discussions about gold prices, and I’ve found that many people simply attribute gold’s rise and fall to interest rate cuts or inflation. In fact, the underlying logic is far more complex.

What truly drives up gold prices is long-term skepticism about the U.S. dollar credit system. The 2022 foreign exchange reserve freeze event fundamentally shook the foundation of sovereign asset security. Since then, gold has not only remained an inflation hedge—it has also become a comprehensive hedging asset against geopolitical risks and fiscal pressures.

I’ve noticed a very interesting phenomenon: central banks’ gold purchases have never really stopped since the breakout in 2022. According to data from the World Gold Council, in 2025 global central banks’ net gold purchases exceeded 1,200 tons, marking the fourth consecutive year of surpassing the 1,000-ton threshold. More importantly, 76% of the surveyed central banks believe they will increase their gold allocation ratio over the next five years, while also expecting U.S. dollar reserves to decline. This is not short-term hype, but a structural long-term shift.

The forces pushing gold prices higher can roughly be divided into two categories. One is slow-moving variables—falling confidence in the U.S. dollar, central banks continuing to accumulate, and the trend toward de-dollarization. The other is fast-moving variables—uncertainty in tariff policy, expectations for rate cuts, and heightened geopolitical tensions. The latter creates volatility, while the former determines the bottom. This also explains why, after the international gold index experiences a substantial pullback, the strength of the rebound remains robust.

To be honest, there is still an opportunity to participate now, but it depends on what role you play. If you’re a short-term trader, there are indeed chances around the periods before and after U.S. market data releases, because volatility becomes noticeably evident. But new traders should never blindly chase the highs; start with a small amount to test the waters first. If you’re a long-term allocator, gold is suitable as a stabilizer for an investment portfolio, but you need to be mentally prepared to withstand a pullback of more than 20%—gold’s average annual amplitude is 19.4%, which isn’t lower than stocks.

Based on institutional forecasts, in 2026 gold prices look more like choppy trading at high levels with an upward bias. Goldman Sachs has adjusted its year-end target to 5700 dollars, JPMorgan sees 6300 dollars, and Citigroup expects an average price of 5800 dollars in the second half of the year. But these forecasts all come with assumptions—that central banks keep buying, the Fed cuts rates, and private hedging demand does not decrease. Once these conditions change, gold prices will adjust accordingly.

My view is that the fundamental logic of the gold bull market is still there—global debt pressures, cracks in the credit system, and geopolitical risks that have not gone away. But don’t expect a one-way rally with no turning back. In 2025, due to adjustments in Fed policy expectations, there was a pullback of 10-15%; and in early 2026, a rebound in real interest rates triggered another sharp decline of 18%. The key is to monitor these macro signals systematically rather than follow the latest news.

If you want to do swing trading, tools like a gold ETF or XAU/USD generally offer better liquidity and lower trading costs. Trading costs for physical gold are 5-20%, and frequent trading will eat up a large portion of profits. Most importantly, think through your positioning first—are you trading short-term to catch volatility, or are you making long-term allocations? Then decide how to enter. Going with the trend matters much more than blindly following the crowd.