Recently, I noticed a rather interesting phenomenon—gold prices have been hitting new highs for more than the past year, yet many people still don’t really understand the underlying logic; they just follow the news. After observing it myself, I think it’s necessary to sort this out.

The root cause of the gold rally isn’t anything like short-term inflation or panic, but rather deeper, structural changes. Think about it: 2022 was a watershed year. Before that, the market directly tied gold prices to the dollar and interest rates; afterward, factors like central banks buying gold, geopolitical developments, and tariff policies started to matter more. What does this reflect? It reflects that the credit monetary system represented by the U.S. dollar—and its “three pillars of credit” behind it—economic productivity, military strength, and institutional credibility—has begun to wobble. In particular, the event in 2022 when foreign exchange reserves were frozen directly undermined the contractual cornerstone of the inviolability of sovereign asset security. Gold is the only “ultimate yardstick of value” that cannot be frozen unilaterally and that does not rely on any sovereign credit. That is the core logic behind gold’s price trend.

Now let’s look at the main forces driving the gold rally. One is structural factors that lift the base—these are slow-moving variables. First is the long-term adjustment in trust toward the dollar—U.S. fiscal deficits widening, debt disputes occurring frequently, plus the trend toward de-dollarization, leading to capital continuing to shift from the dollar into hard assets. This is not a short-term phenomenon, but a long-term structural change. Second, major central banks have continued to increase their gold holdings. Last year, global central banks’ net gold purchases exceeded 1,200 tons, marking the fourth consecutive year that the total surpassed the 1,000-ton threshold. According to a survey by the World Gold Council, 76% of surveyed central banks believe the proportion of gold will increase moderately or significantly over the next five years, and most central banks also expect the proportion of dollar reserves to decline. This is not short-term behavior, but an important structural force supporting the floor of gold prices.

Another is cyclical forces that create volatility—these are fast-moving variables. Recently, uncertainty in trade protectionism and tariff policies has directly triggered a surge in gold prices. Policy uncertainties piling up one after another cause market funds to flow into safe-haven assets. Historically, during periods like this, gold prices typically see short-term increases of 5% to 10%. Expectations of Federal Reserve rate cuts also matter. Rate cuts reduce the opportunity cost of holding gold and weaken the dollar—both raise gold’s appeal. Geopolitical risk remains an important support for gold. As long as global conflicts, sanctions, and supply-chain vulnerabilities still exist, it’s difficult for gold to fully detach from its safe-haven premium.

Besides these main drivers, gold’s sharp surge is also closely tied to other factors. Global economic growth is slowing, and inflationary pressures remain persistent. As of last year, the total global debt reached $307 trillion. High debt levels mean that countries have limited flexibility in interest-rate policies, so monetary policy may lean more toward easing, thereby lowering real interest rates and indirectly boosting gold’s attractiveness. The stock market is already at historical highs, concentration risk is increasing, and many people allocate to gold to stabilize their investment portfolios. Media and social media hype also drive short-term capital inflows—continuous reporting and emotional amplification lead large amounts of short-term funds to pour into the market at any cost. Investors’ preferences for more flexible trading methods are also changing. They want to dynamically adjust their investments, which is fueling growing interest in gold trading instruments.

The question now is: how will gold prices trend in 2026? Based on institutional forecasts, the overall outlook remains tilted toward the bulls, but there is significant disagreement across the forecast ranges. Consensus expects the average price in 2026 to be between $4,800 and $5,200 per ounce. The year-end target price baseline range is $5,400 to $5,800, and the optimistic scenario is $6,000 to $6,500. Goldman Sachs has raised its year-end target price from $5,400 to $5,700; JPMorgan expects $6,300 by the fourth quarter; Citibank expects an average of $5,800 in the second half of the year; and UBS projects an average of $5,000 for the full year. The World Gold Council notes that if economic growth slows and interest rates fall further, gold could rise moderately; but if policies successfully boost growth and the dollar strengthens, gold prices could also fall. In other words, 2026 looks more like “high-level consolidation with an upward bias.”

My own view is that central bank buying of gold reflects long-term doubts about the dollar system. This trend won’t disappear overnight, because sticky inflation, debt pressure, and geopolitical tensions still remain. The higher the foundation for gold prices becomes, the more limited the downside during a bear market, and the stronger the continuation of the bull market. But note that gold’s rally has never been a straight line. Recently, due to a rebound in real interest rates and easing of the crisis, there has been a sharp 18% pullback, with volatility running high. The key is whether you have a systematic way to monitor these signals—not whether you follow the news blindly.

If you’re a short-term trader, the choppy, volatile market can present good opportunities—especially around the release of U.S. market data, when volatility tends to amplify. But you must set strict stop-losses. If you’re a beginner looking to seize recent volatility opportunities, start with a small amount to test the waters—never blindly increase your position. Learn to use an economic calendar, track the timing of U.S. economic data releases, and use that to support your trading decisions. If you’re a long-term allocator, gold is suitable as a portfolio diversification tool, but you should be psychologically prepared to tolerate a drawdown of more than 20%. Don’t put all your assets into it—diversification is safer. If you want to maximize returns and you have experience, you can adopt a long-and-short combined strategy: hold the core positions long-term, and use volatility in the satellite positions for short-term trades.

A few points to remind everyone. Gold price volatility is not lower than that of stocks. Gold’s annual average amplitude is 19.4%, compared with the S&P 500’s 14.7%. Gold’s cycle is very long. Buying it as a store of value over 10+ years can work, but along the way it could double, or it could even be cut in half. Transaction costs for physical gold are relatively high—typically 5% to 20%. Frequent trading will eat up a large portion of profits. If you want to do swing trades, gold ETFs or gold spot trading instruments with better liquidity are preferable. Follow the trend, think through your positioning, and then decide how to enter the market.

Overall, this gold bull market may look on the surface like it’s being driven by rate cuts, inflation, and geopolitical risk, but underneath the real driver is the crack in the global credit system. Gold is a long-term hedge against systemic risk. The trend of central banks buying gold has been ongoing since 2022, and the supporting forces for gold prices in 2026 won’t suddenly disappear. Building a clear analytical framework is more important than predicting short-term prices—only then can you find your own rhythm amid the volatility.