I've been observing this recent gold market trend. To truly understand why gold is rising, you first need to grasp the fundamental logic behind its increase.

Many people think the reason for gold's rise is inflation or panic, but it's not that simple. What I see is that this rally reflects a long-term skepticism of the global dollar credit system. Since the moment foreign exchange reserves were frozen in 2022, the market's perception of "asset safety" has completely changed. The reason central banks are aggressively increasing their gold holdings is because it is the only asset that cannot be unilaterally frozen and does not rely on any sovereign credit.

Looking at the data, you can feel the strength of this shift. Last year, global central banks net purchased over 1,200 tons of gold, marking the fourth consecutive year surpassing 1,000 tons. More importantly, according to the World Gold Council survey, 76% of central banks expect to increase their gold holdings over the next five years, while also anticipating a decline in dollar reserves. This is not short-term speculation but a clear structural shift.

Of course, there are multiple reasons for gold's rise. The expansion of the US fiscal deficit, frequent debates over debt ceiling, and the trend of de-dollarization all lead to capital shifting from dollar assets to hard assets. Coupled with trade protectionism and tariff policy uncertainties, market uncertainty increases. During such times, safe-haven funds tend to flow into gold. Historically, during periods of policy uncertainty, gold prices often see short-term gains of 5-10%.

Geopolitical risks are also a continuous supporting factor. Global conflicts, sanctions, and supply chain vulnerabilities persist, making it hard for gold to fully detach from safe-haven premiums. Plus, with the Fed's expected rate cuts, this will simultaneously lower the opportunity cost of holding gold and weaken the dollar, both of which boost gold's attractiveness.

But I want to emphasize that gold price volatility has never been a straight line upward. Earlier this year, there was an 18% sharp correction, which reflects the market digesting the rebound in real interest rates and the easing of crises. So if you want to participate in this trend, the most important thing is to build a monitoring system rather than blindly following the crowd.

For different types of investors, strategies should also differ. If you're a short-term trader, volatility around US data releases (non-farm payrolls, CPI, FOMC) indeed offers good opportunities, but you must set strict stop-losses. If you're a beginner, start with small amounts to test the waters, avoid blindly adding positions, and learn to track economic calendars and US data release timings—this will greatly aid your decision-making. If you're a long-term allocator, gold is suitable as a diversification tool in your portfolio, but be prepared to withstand declines of over 20%. Experienced investors can consider a combination of long and short positions—holding core positions long-term while using volatility for short-term trades.

Speaking of which, gold's average annual amplitude is 19.4%, higher than the S&P 500's 14.7%. Physical gold also has high transaction costs, generally between 5-20%. Frequent trading can eat into a large portion of profits. If you want to do swing trading, gold ETFs or gold XAU/USD instruments with better liquidity are more suitable.

Let's see how institutions forecast the 2026 market. Goldman Sachs has raised its year-end target from $5,400 to $5,700, citing ongoing central bank purchases, Fed rate cut expectations, and a surge in private hedging demand. JPMorgan expects $6,300 in Q4, mainly driven by ETF inflows and escalating geopolitical crises. Citibank's average yield estimate for the second half is $5,800. UBS projects an average price of $5,000 for the full year, viewing recent corrections as buying opportunities. The World Gold Council participants currently expect an average price of about $5,100 for the year.

But these forecasts are not one-way. If economic growth slows and interest rates further decline, gold may gently rise; but if policies successfully boost growth and the dollar strengthens, gold prices could fall back. The 2026 gold price is more likely to fluctuate at high levels with an upward bias rather than a one-way unstoppable rally.

My view is that central bank gold purchases reflect a long-term skepticism of the dollar system. Persistent inflation, debt pressures, and geopolitical tensions remain, so this trend won't suddenly disappear by 2026. The bottom of gold prices is getting higher, with limited bear market declines and strong bullish continuation. But the key is whether you have a system to monitor these changes, rather than blindly chasing news. Clarify your positioning—whether short-term, long-term, or portfolio allocation—and decide how to enter accordingly.