Gold's bull run shows no signs of abating. The key question for consumers is whether they should still consider buying in.
On January 26, spot gold and silver both experienced significant surges. Spot gold opened above the $5,000 per ounce mark, reaching an intraday high of $5,110.25 per ounce. As of 18:04, it was trading at $5,079.21 per ounce, marking a near 2% gain for the day. This followed a week where spot gold rose for five consecutive sessions, successively breaching the $4,700, $4,800, and $4,900 thresholds. Spot silver also opened sharply higher, trading at $109.18 per ounce as of 18:04, with an intraday jump exceeding 6%. Fueled by the precious metals rally, A-share gold stocks collectively opened higher on January 26, with many thematic stocks related to precious metals hitting their daily upside limits. Financial institutions have already revised their gold price forecasts upwards. In a research report dated January 22, Goldman Sachs raised its gold price prediction for December 2026 to $5,400 per ounce, up from a previous forecast of $4,900 per ounce. What is driving this frenzied ascent in gold prices? Will the bull market persist, and should consumers still consider purchasing gold?
What's Fueling the Relentless Surge? Li Zhao, Head of Macro Asset Allocation Research at CICC Research Department, analyzed the reasons behind the recent series of record highs for gold. The primary driver is the Federal Reserve's re-initiation of an easing cycle. In 2025, the Fed implemented three consecutive 25-basis-point rate cuts and began purchasing short-term Treasury bonds in December, expanding its balance sheet to inject liquidity into the market. Although the pace of rate cuts might slow in early 2026, the appointment of a new Fed Chair and an expected decline in US inflation during the second half of the year could accelerate the easing tempo once more. A shift in the credibility of the US dollar is also a factor. On the fiscal policy front, the US fiscal deficit rate has remained around 6% post-pandemic, significantly higher than pre-pandemic levels, leading to rapid national debt accumulation and heightened debt risks. Regarding monetary policy, increased presidential influence over Fed decisions and the impending nomination of a new Chair have raised investor concerns about the central bank's diminishing independence. "The combination of fiscal and monetary factors has eroded investor confidence in the dollar system and dollar-denominated assets, pushing the dollar into a depreciation cycle," Li Zhao pointed out. The DXY US Dollar Index fell approximately 9% in 2025 and has declined a further 3% since the start of 2026. Gold, possessing monetary attributes, benefits as an alternative to the dollar system during such periods. Furthermore, geopolitical and policy uncertainties have fueled safe-haven demand. Chen Yanbing, Senior Strategist at China Asset Management, stated that the global order is currently in a period of profound adjustment. Recent events, including tariff policies proposed by the Trump administration, the Greenland dispute, fissures within NATO, and turmoil in Venezuela, have all intensified market risk aversion. "Gold breaking through $5,000 per ounce might precisely be a microcosm of a paradigm shift in the global macroeconomy," Chen Yanbing said. According to World Gold Council data, global official gold reserves stood at approximately $3.69 trillion by the end of the third quarter of 2025, accounting for 28.9% of total official reserves—the highest level since 2000. Concurrently, IMF data shows the US dollar's share of global foreign exchange reserves has dropped to 56.92%, the lowest since 1995. Chen Yanbing added that once the fundamental logic for the rally gains widespread market acceptance, the rising price itself can become a justification for further increases, significantly amplifying the impact of the initial drivers through sentiment channels.
"Central Banks Vie with Private Investors for Gold" "Central banks have begun competing with private investment for limited gold supplies," Goldman Sachs noted in its report, identifying this as a key reason for the accelerated pace of gold's appreciation since 2025. Chen Yanbing indicated that, aiming to diversify risks and achieve foreign reserve diversification, global central banks, particularly those in emerging markets, have been large-scale net buyers of gold since 2022. Their average annual purchases from 2022 to 2024 exceeded 1,000 tonnes, more than double the average of the previous decade. For instance, the National Bank of Poland announced on January 20 local time that it had approved a plan to purchase up to 150 tonnes of gold, which would increase the country's total gold reserves to 700 tonnes. Data released by China's State Administration of Foreign Exchange shows that China's official gold reserves reached 74.15 million ounces by the end of December last year, an increase of 30,000 ounces from the previous month and a cumulative increase of 860,000 ounces for the full year. This marks the 14th consecutive month of gold accumulation by the People's Bank of China since November 2024. Simultaneously, individual investors have become a major force in the gold market, with their share of holdings in gold ETFs continuously rising. According to Wind data, gold ETFs saw a net inflow exceeding 10 billion yuan last week alone. On January 25, the scale of Huaan Gold ETF reached 100.762 billion yuan, breaking the 100-billion-yuan threshold for the first time and becoming the first commodity ETF in mainland China to achieve this milestone.
Dampening Consumption or Fueling Sentiment? Rising gold prices have further pushed up retail jewelry store quotes. Public information shows that on January 26, gold jewelry quotes from Chow Tai Fook, Chow Tai Seng, and CHJ Jewellery were 1,578 yuan per gram; quotes from Lao Feng Xiang, Luk Fook Jewelry, and Emperor Jewellery were 1,576 yuan per gram; and quotes from Lao Miao Gold and Yayi Gold Store were 1,575 yuan per gram. Overall, these prices represented an increase of 22 to 25 yuan per gram compared to the prices on January 25. Confronted with increasingly steep prices, some consumers lament, "Gold has lost its significance as mere jewelry; even for weddings, people aren't buying the traditional 'three golds' anymore." The consumer side is facing a dual impact. Li Zhao pointed out that although retailers might employ tactics like delayed price hikes or promotional discounts, for demand related to events such as weddings or gift-giving, rapidly rising gold prices significantly increase the cost for consumers to purchase the same weight of gold. This exerts a certain inhibitory effect on the consumption of jewelry and gift gold, potentially forcing consumers to turn to substitutes like silver or platinum. On the other hand, Chen Yanbing noted that for consumers who view gold jewelry as an asset combining wearability with value preservation, or those driven by a "fear of missing out" mentality where they buy as prices rise, the price surge might actually strengthen their purchasing resolve. Particularly for gold products from strong brands with high craftsmanship value, consumer enthusiasm remains robust, with queues at some gold brand counters in shopping malls even surpassing last year's scenes.
How Long Can the Gold Bull Market Last? In the face of the short-term price surge, investors are advised to remain rational. "The core of allocating to gold now should shift from a short-term trading mindset to a perspective of medium- to long-term strategic allocation," Chen Yanbing cautioned. He reminded that gold is inherently a non-yielding asset; its holding return relies entirely on the price difference between buying low and selling high, lacking the cash flow support provided by bond coupons or stock dividends. Chasing price differentials with heavy positions at current historical highs undoubtedly carries significant risk. Historical data indicates that when the gold price deviates from its 200-day moving average by more than 20%, it is often followed by a period of correction. The current deviation has once again reached a high level exceeding 30%, signaling a marked increase in short-term volatility risk. Ming Ming, Chief Economist at CITIC Securities, expressed that from a long-term perspective, US economic pressures, the Fed's accommodative monetary policy, and persistent US inflation are likely to continue, suggesting precious metal prices may remain in a pattern of high volatility. Chen Yanbing stated that market volatility will intensify significantly going forward, highlighting two key variables to watch. The first is the path of the Federal Reserve's monetary policy. "The market has already priced in substantial optimistic expectations. If US inflation resurges, prompting the Fed to slow its rate-cutting pace, it would impose阶段性压制 on gold prices," she said. The second variable is the marginal change in global central bank gold purchasing behavior. Since the second half of 2025, the explosive growth phase of central bank buying appears to have passed, and central banks in countries like Russia and the Philippines have begun selling gold. Li Zhao's team analyzed gold market trends over the past 50 years, finding that the total duration of bull and bear markets accounted for 55% and 45% of the time, respectively, with the median length of both a single bull market and a single bear market being 4.7 years. "Therefore, after a three-year gold bull market, it is unwise to blindly bet on perpetual price increases. Instead, close attention should be paid to the economic and policy environment. When decisive factors, especially the direction of Fed policy and the health of the US economy, undergo major shifts, investors need to adjust their strategies decisively," he advised. Reviewing the patterns ending five historical gold bull markets, Li Zhao indicated that their conclusion typically requires two conditions: the Fed exiting its accommodative policy and a comprehensive improvement in the US economy. Currently, such an inflection point has not yet materialized.
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