Spot gold prices surpassed $4,400 per ounce for the first time in 2025, marking a cumulative increase of nearly 68% and emerging as one of the best-performing assets this year. As of December 22, spot gold prices broke through the $4,400/oz threshold in global trading, with a year-to-date gain of close to 68%, far outpacing the S&P 500’s 17% rise over the same period. Against a backdrop of heightened global economic uncertainty, gold has further solidified its status as the "ultimate safe-haven asset."
Looking ahead to 2026, key questions remain: Can the gold bull market sustain its momentum? Will central banks curb gold purchases amid record-high prices? How should retail investors adjust their strategies? In an exclusive interview, Wang Lixin, CEO of the World Gold Council (WGC) China, shared insights into the fundamental drivers and future trends of the gold market.
**The Core Driver Behind Gold’s Rally: A Crisis in Dollar Credibility** Wang attributed gold’s 2025 surge to four key factors: 1. Macroeconomic policies, particularly Fed monetary policy (represented by real dollar interest rates)—the most critical variable. 2. Geopolitical conflicts. 3. Market momentum and supply-demand dynamics. 4. Other special factors. "The dominant factor in 2025 was likely the crisis in dollar credibility," Wang noted, calling it the deepest driver behind increased gold allocations by central banks, institutions, and retail investors. This trend was reflected in rising global gold ETF holdings and continued central bank reserve accumulation. Geopolitical tensions in regions like Ukraine, the Middle East, and East Asia also provided sustained support for prices.
**2026 Outlook: Key Variables Under an Optimistic Baseline** Most institutional investors remain bullish for 2026. Goldman Sachs, for instance, expects gold to benefit from central bank demand (hedging geopolitical risks) and Fed rate cuts. The WGC’s *2026 Global Gold Market Outlook* modeled four macroeconomic scenarios: - **Baseline consensus**: -5% to +5% price fluctuation. - **Mild recession**: +5% to +15%. - **Downward spiral**: +15% to +30%. - **Reinflation resurgence**: -5% to -20%. (Reference: LBMA gold price average in November 2025.) Wang emphasized that gold prices would remain stable or rise—potentially posting double-digit gains—in three scenarios, with only reinflation posing downside risks.
He added that U.S. economic policy adjustments warrant close monitoring. "The 2026 midterm election year could amplify the impact of tariffs and earlier economic policies," he said, noting that a U.S. soft landing (or lack thereof) would significantly influence gold’s trajectory more than geopolitical conflicts.
**Central Bank Demand: Broadening Participation, Unabated Trend** Central bank gold buying, a major price driver in recent years, continued unabated in 2025 with a new characteristic: expanded participation. "It’s not just emerging markets—developed economies like Poland are also boosting reserves," Wang observed. Global central banks purchased over 600 tonnes in the first three quarters, likely matching or exceeding the five-year average. The WGC projects full-year 2025 purchases at 750–900 tonnes. While high prices may reduce tonnage, total spending remains robust. Wang stressed that reserve diversification is a long-term process, with gold’s strong performance reinforcing its appeal.
**Retail Market Polarization: Investment Boom vs. Jewelry Slump** China’s retail market exhibited stark contrasts under record gold prices: - **Investment demand surged**. Gold’s RMB-denominated returns exceeded 60% YTD through November, attracting younger investors via small bars and internet ETFs. Notably, Q1–Q3 2025 marked the first time China’s gold investment demand surpassed jewelry demand since the Shanghai Gold Exchange’s 2002 launch. - **Jewelry consumption slumped** due to high prices and tax adjustments. Domestic jewelry prices hit new highs on December 23, with major brands like Chow Tai Fook and Lao Feng Xiang exceeding RMB 1,400/gram.
**Investment Strategy: Think "Strategic Core Position"** Wang advised against treating gold as a speculative tool: "Investors should build a holistic view—allocating 5%–15% of non-property investable assets to gold as a long-term ‘strategic core.’" For newcomers, he discouraged waiting for pullbacks: "Instead of chasing lows, accumulate positions gradually if the allocation case holds." Lastly, Wang warned against high-interest, non-compliant gold custody schemes: "Safety is paramount. Chasing small yields at the cost of principal is a trap to avoid."
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