Spot gold surged through the $5,000-per-ounce mark on January 26, briefly touching $5,110.25 intraday and settling near $5,079.21 by early evening — a near 2% gain on the day. Silver raced higher too, trading around $109.18 an ounce, up more than 6%, while gold-related equities in China opened strongly and many precious‑metals stocks hit daily limits.
Investment banks and strategists have reset their targets upward. Goldman Sachs in late January raised its December 2026 forecast to $5,400 per ounce from $4,900, reflecting a confluence of monetary easing expectations, a weakening dollar and renewed safe‑haven demand. Analysts at China International Capital Corporation (CICC) and major asset managers point to policy shifts in Washington and a sustained campaign of official and retail buying as the engines of the rally.
The monetary story is central. After cutting rates three times by 25 basis points in 2025 and restarting purchases of short‑dated Treasuries, the Federal Reserve is now seen as having entered a looser cycle. Market participants expect the pace of easing to fluctuate with a new Fed chair and the course of U.S. inflation, but the broad move since 2025 has already weakened the dollar: the DXY index fell roughly 9% in 2025 and another 3% in early 2026.
Fiscal stresses and questions about central‑bank independence have amplified that dynamic. A larger post‑pandemic U.S. deficit — near 6% of GDP — and rapid debt accumulation have raised concerns about long‑term fiscal credibility. Recent political friction over Fed policy and an impending nomination for a new chair have heightened investor nervousness about the dollar as the unchallenged global anchor, boosting demand for gold as an alternative monetary asset.
Geopolitics has added a second leg to the bid. A string of tensions — renewed tariff rhetoric from Washington, disputes over Greenland, visible strains within NATO and unrest in Venezuela — has nudged investors toward safe havens. World Gold Council and IMF data underscore the structural shift: official gold holdings reached about $3.69 trillion and 28.9% of official reserves by end‑Q3 2025, while the dollar’s share of global foreign‑exchange reserves slid to 56.92%, its lowest since 1995.
Official buyers have been particularly active. Emerging‑market central banks have aggressively accumulated gold since 2022 — averaging more than 1,000 tonnes a year from 2022–24, roughly double the prior decade’s pace — as they diversify reserves. Poland has approved a purchase plan of up to 150 tonnes, and China’s official reserves rose to 74.15 million ounces at the end of December, marking the 14th consecutive monthly increase since November 2024. At the same time, a handful of central banks, including Russia and the Philippines, have begun modest sales, suggesting the surge in demand may be moving from explosive to structural.
Private investor flows and retail behaviour have sharpened the market move. Chinese gold ETFs posted net inflows of more than RMB 10 billion the prior week, and the Huaan Gold ETF surpassed RMB 100.7 billion in assets under management — the first commodity ETF in the mainland to clear that threshold. Rising spot prices translated quickly into higher retail jewellery quotes across major chains in China, with shop prices lifting roughly RMB 22–25 per gram and a visible cooling in traditional bridal purchases.
Consumption and sentiment are pulling in opposite directions. Rapidly rising prices discourage some buyers of jewellery and gifts, who substitute silver or platinum or delay purchases. Yet for consumers who treat gold as both adornment and store of value, a rising market can strengthen resolve to buy — a “buying the breakout” psychology that further supports prices for branded, craft‑led products.
Analysts caution that the rally is not without risk. Gold is a non‑yielding asset whose returns depend on price appreciation rather than cash flows; when prices deviate more than 20% from their 200‑day moving average, historical patterns point to a heightened chance of corrections. Current deviation metrics exceed 30%, signaling material short‑term volatility and the danger of sharp pullbacks if expectations about Fed easing or central‑bank demand change.
Looking ahead, two variables will matter most: the Fed’s policy path and the marginal behaviour of official buyers. If inflation reaccelerates and the Fed slows or halts cuts, gold prices could face a substantial headwind. Conversely, sustained official accumulation or renewed bouts of geopolitical stress could prolong the bull phase. Historical analysis compiled by CICC shows that gold bull and bear markets have similar median lengths of about 4.7 years, implying that after roughly three years of gains investors should avoid assuming perpetual upside and instead monitor policy inflection points closely.