I’ve been watching the current gold market rally, and it’s definitely interesting. To be honest, the logic behind this upswing is far more complex than just rate cuts or inflation. What’s really driving it is the long-term hedging demand that emerged after cracks appeared in the global credit system.

I’ve noticed a very key phenomenon—central banks’ gold-buying never truly stopped after it broke out in 2022. According to WGC data, last year global central banks’ net gold purchases exceeded 1,200 tons, reaching over 1,000 tons for four consecutive years. More importantly, most surveyed central banks (76%) believe they will increase the proportion of gold over the next five years, while also expecting their U.S. dollar reserves to decline. This isn’t short-term hype; it’s a structural shift in asset allocation.

Why is this happening? Put simply, confidence in the U.S. dollar is being recalibrated. Coupled with the widening U.S. fiscal deficit and frequent disputes over debt, the de-dollarization trend is clear—funds are continuously shifting from dollar assets to hard assets. The uncertainty around tariff policies brought about by the 2025 wave of trade protectionism even directly triggered a frenzy of rising gold prices.

Now, what we need to look at are the forces that drive gold’s price action. On one side, long-term structural factors such as central banks continuing to add to holdings, declining trust in the dollar, and geopolitical risks are propping up the floor. On the other side, cyclical factors such as rate-cut expectations, tariff fluctuations, and geopolitical events create short-term bursts. Global debt has already reached $307 trillion. A high debt level means countries have limited flexibility in interest-rate policy. Monetary policy tends to be more accommodative, real interest rates get suppressed, and that naturally makes gold more attractive.

As for the current position, I think we need to locate it using a few coordinates. Production cost composition forms the hardest floor. After adjusting for inflation, the real gold price still has distance from the historical peak of 1980, which leaves room for a long-term advance. But don’t forget: gold’s volatility—its annual average swing of 19.4%—is actually not lower than stocks. The sharp 18% pullback in early 2025 is a clear example.

Based on institutional forecasts, in the period from 2026 to now, gold looks more like high-level consolidation with an upward tilt. Goldman Sachs has raised its year-end target price to $5,700. JPMorgan expects $6,300 in the fourth quarter. UBS’s forecast for the full-year average price is $5,000. The logic behind these predictions is basically consistent: central banks continue buying, expectations for U.S. Federal Reserve rate cuts, and demand for safe havens—but the premise is that these factors continue to persist.

For retail investors, there are still opportunities now, but you need to think through your positioning clearly. If you’re a short-term trader, volatility tends to be amplified around U.S. market data releases (non-farm payrolls, CPI, FOMC), and technical analysis becomes easier to judge. Still, you must set strict stop-losses and control risk to 1–2%. If you’re a beginner, start with a small amount to test the waters—don’t blindly ramp up positions. Learn to use an economic calendar to track the timing of data releases. For long-term allocators, be psychologically prepared to withstand drawdowns of 20% or more. Gold is suitable as a diversification tool within an investment portfolio, but don’t put all your life savings into it. Experienced investors can try combining long and short approaches—hold a core position long-term, and use the swings to do short-term trades with the satellite position.

A few special reminders are worth noting. Trading physical gold has high costs (5–20%). Frequent trading will eat away a large portion of your profits. If you want to trade in swings, gold ETFs or XAU/USD generally offer better liquidity. Gold’s cycle is long: as a store-of-value asset, it can deliver gains on a 10+ year horizon, but in the meantime it could also double or get cut in half (as it did in 2011–2015). The stock market is currently at a historical high, the number of market leaders is limited, and concentration risk is rising—this has also led many people to allocate to gold to stabilize their investment portfolios.

In the end, the deep driver of this gold bull market is the cracks in the global credit system. Central banks buying gold reflects long-term skepticism toward the U.S. dollar system. This trend won’t suddenly disappear in 2026, because sticky inflation, ongoing debt pressures, and sustained geopolitical tensions are still there. The lower bound of gold prices keeps being raised higher and higher. In bear markets, the downside drawdown is limited, and in bull markets, the continuation power is strong. But remember one thing: gold’s rally is never a straight line. It requires a system to monitor volatility—not blindly following the news. Follow the trend, clarify your position, and then decide how to enter.