I’ve been keeping an eye on this latest gold market rally. To be honest, the logic behind gold’s price movement is far more complex than just “up or down.”

Many people only see gold rising and assume it’s driven by inflation or panic. But that’s not the case. What drives this bull market is that cracks have appeared in the U.S. dollar credit system itself. The 2022 foreign-exchange reserve freeze incident had a much greater impact on global central banks than anyone expected—suddenly realizing that dollar-denominated assets are not absolutely safe, which changed the entire set of rules.

Since then, central banks haven’t truly stopped buying gold. According to data from the World Gold Council, in 2025 global central bank net gold purchases exceeded 1,200 tons, marking the fourth consecutive year above the thousand-ton mark. Even more interesting is that among the central banks surveyed, 76% believe they will increase the proportion of gold over the next five years, while also expecting U.S. dollar reserves to decline. This is not a short-term move, but a long-term structural shift.

So the base for gold’s price action is being raised continuously—this is the real support.

Of course, short-term volatility is still quite intense. Last year, as expectations for Federal Reserve policy shifted, gold pulled back by more than 10–15%. And at the start of this year, when real interest rates rebounded, there was another sharp 18% correction. These kinds of swings can scare off many people, but if you understand the underlying logic, you’ll realize these pullbacks are actually opportunities.

Uncertainty in tariff policies, expectations of Fed rate cuts, and geopolitical risks—these are creating short-term jolts. In particular, around major U.S. market data releases (non-farm payrolls, CPI, FOMC), volatility is clearly amplified. But these are fast-changing variables. The ones that truly determine the direction of gold prices are the slow-moving factors: declining confidence in the dollar, continued central bank accumulation, and high levels of global debt.

Speaking of debt, by 2025, total global debt will reach $307 trillion. This means countries’ ability to adjust interest-rate policies is constrained, monetary policy is more inclined toward easing, real interest rates are suppressed, and gold’s attractiveness rises as a result. On top of that, with stock markets already at historic highs, many investment portfolios have started allocating gold as a stabilizer.

Based on institutional forecasts, gold’s price trend in 2026 is likely to be bullish, though the disagreement is substantial. Goldman Sachs raised its year-end target price from $5,400 to $5,700; JPMorgan expects it to reach $6,300 in Q4; UBS projects an average annual price of $5,000 but a mid-year target of $6,200. In optimistic scenarios, some even predict a $6,500–$7,200 range. But all of these are built on assumptions such as geopolitical tensions escalating or the dollar depreciating significantly.

My personal view is that in 2026, gold’s price action will look more like “high-level oscillation with an upward bias,” not a straight climb higher. The trend of central banks buying gold won’t disappear, because sticky inflation, debt pressures, and tight geopolitical conditions are still there. But don’t expect a one-way market without corrections.

For different types of investors, the strategy should be different. If you’re an experienced short-term trader, a volatile market does offer plenty of opportunities—but you must set strict stop-losses. If you’re a beginner, start with a small amount, learn how to read the economic calendar, and don’t blindly chase after higher prices. If you’re a long-term allocation investor, gold is indeed suitable as a portfolio diversification tool—but be mentally prepared to withstand a drawdown of more than 20%. Gold’s annual average volatility is 19.4%, not much smaller than stocks.

With experience, you could consider a blend of both styles: hold a core position long-term, and use the satellite position to trade short-term based on volatility. But that requires relatively strong risk-control ability.

Finally, I want to mention that the transaction costs for physical gold are very high (5–20%). Frequent trading can eat up a large portion of your profits. If you want to do swing trading, gold ETFs or tools like XAU/USD, which have better liquidity, are more suitable. The key is to think through your positioning first—whether it’s short-term, long-term, or allocation—and then decide how to enter.

This gold bull market, on the surface, is driven by rate cuts, inflation, and geopolitical risks—but underneath it, the deeper driver is the long-term adjustment of the global credit system. Once you understand that, the volatility in gold prices won’t feel quite so frightening.