In 2025, gold performed remarkably well, recording the largest annual increase since 1991. Although volatility was intense and exceeded conventional expectations, the underlying logic is very clear—the fundamentals of supply and demand have never changed. The key forces driving gold prices higher are still fermenting, and in 2026, gold prices are likely to remain strong. However, short-term correction risks should also be watched.

Why are we still bullish?

First, central banks. The de-dollarization and gold-buying cycle of global central banks is still ongoing, and in 2025, gold purchase volumes remain above historical averages. The strategic contraction of the US has led to a reshaping of the international landscape, with countries seeking to increase gold reserves to enhance their monetary influence. This trend will not stop, and in 2026, central bank gold-buying momentum remains sufficient.

Next, safe-haven demand. Geopolitical risks such as the Russia-Ukraine conflict and Middle East tensions persist, and concerns over US fiscal difficulties and Federal Reserve credibility have not been alleviated. Although markets have partially priced in these risks, the fragility of the global economy and debt issues remain unresolved, naturally directing safe-haven funds into gold.

Opportunity cost is more favorable. Real interest rates are trending downward, and the US dollar is weakening. The key is that in 2026, expectations of Federal Reserve rate cuts are heating up. As long as inflation remains moderate, this is very positive for gold—holding costs decrease, and investment appeal increases.

Finally, market liquidity. In 2025, demand for gold ETFs rebounded strongly, mainly driven by retail investors. Holdings have not yet reached historical highs, and there are no obvious signs of market congestion. More interesting is the imbalance between paper gold and physical supply—ratio as high as 100:1, which sets the stage for a price surge. Once liquidity shocks occur, market pressure will become evident.