As of 14:25 on January 26, spot gold was quoted at $5,076.65 per ounce against the U.S. dollar, representing an intraday increase of approximately 1.82%.
On January 26, Beijing time, spot gold broke through the $5,000 per ounce mark, setting another historic high.
Since January 2026, the price of gold has surged rapidly, rising more than 15% compared to the beginning of the year and consecutively breaking through the key levels of $4,600, $4,800, and $5,000 per ounce.
Xiong Yuan, Chief Economist at Guosheng Securities, stated in a January media interview that this round of gains is primarily driven by geopolitical risk sentiment. Specific developments involving the United States in Venezuela and Greenland have acted as direct catalysts. Concurrently, the upcoming change in leadership for the Federal Reserve Chair in the first half of 2026, and the associated personnel arrangements, have raised market concerns about the Fed's independence, further fueling the rise in gold prices.
Data indicates that gold has now been rising for over three consecutive years. In 2023, gold achieved a gain of more than 13% for the full year, successfully closing above the critical $2,000 per ounce level. Entering 2024, gold continued its strong performance, reaching a high near $2,790 per ounce during the year and ultimately concluding the bull run with an annual gain exceeding 26%. The momentum persisted into 2025, with the gold market displaying even sharper upward movement, ending the year on December 31 with a gain of over 60%.
Research from the China Merchants Bank Research Institute shows that since 2022, central bank demand for gold has seen significant growth, becoming a major force influencing gold demand and prices. From the period after the 2008 financial crisis up until 2022, central banks purchased around 500 tonnes of gold annually. With global annual gold demand approximately 4,500 tonnes, central bank purchases accounted for about 11% of total demand, exerting a limited impact on prices. However, starting in 2022, following the outbreak of the Ukraine crisis, central bank purchases doubled from the previous 500-tonne level to around 1,000 tonnes. This surge pushed their share of total demand from 11% to over 20% directly, becoming a significant factor behind the rapid price appreciation of gold in recent years.
Amid the rapid price increase, some institutions have flagged risks. The Bank for International Settlements cautioned in December 2025 that the simultaneous explosive rallies in gold and U.S. stocks signaled potential bubbles—situations often followed by periods of negative or sluggish returns.
Data shows that as of December 31, 2025, the S&P 500 index had accumulated a year-to-date gain of over 16%, while spot gold against the U.S. dollar had surged more than 60%.
Furthermore, the BIS report indicated that a classic signal of market bubble formation is the rising influence of retail investors, evident in their tendency to chase rising price trends.
In contrast, Deng Zhijie, Chief Investment Officer for Emerging Markets at Deutsche Bank, believes gold does not face a bubble risk. He argued that a price rise unsupported by fundamentals constitutes a bubble. Looking at gold, geopolitical risks—from the Russia-Ukraine conflict in 2022 to escalating tensions involving Israel and Iran—have been increasing. As a safe-haven asset, gold has attracted inflows. Therefore, if geopolitical risks persist, gold prices should retain some underlying rigid demand.
Data from the World Gold Council reveals that global gold exchange-traded fund inflows surged to a record $89 billion for the full year 2025. Driven by this, the total assets under management in global gold ETFs doubled to a historic high of $559 billion, and total holdings also climbed to a record peak of 4,025 tonnes.
The BIS report emphasized that retail investors are increasingly moving in the opposite direction to institutional investors: when institutions are withdrawing funds from U.S. equities or maintaining neutral positions on gold, retail investors are showing net inflows. Although retail inflows offset some of the institutional outflows, because retail investors are more prone to herd behavior, their actions could exacerbate price volatility during panic selling episodes. Consequently, their growing market influence may pose a threat to market stability in the future.
Against this backdrop, some institutions remain bullish on gold. In a January 2026 research report, Goldman Sachs raised its year-end 2026 gold price forecast from $4,900 to $5,400 per ounce. This adjustment reflects the materialization of diversification into gold by the private sector. Goldman assumes that these private sector diversification buyers, who are purchasing gold to hedge against global policy risks, will not liquidate their gold holdings in 2026, effectively raising the starting point for their price forecast.
Goldman Sachs expects that, as emerging market central banks are likely to continue structurally diversifying their reserves into gold, central banks will purchase an average of 60 tonnes per month in 2026. This is projected to contribute 14 percentage points to the price increase by the end of 2026. Additionally, with Goldman forecasting the Fed to cut the funds rate by 50 basis points in 2026, Western ETF holdings are expected to rise, contributing an estimated 3 percentage points to the price gain by year-end 2026.
Bank of America's forecast is even more aggressive. Analyst Michael Hartnett wrote in a January 2026 report: "While history cannot predict the future, looking back at four previous gold bull markets, prices surged by an average of approximately 300% over 43 months. Extrapolating from this pattern, gold could potentially reach $6,000 per ounce by the spring of 2026."
Deng Zhijie cautioned that with gold prices at elevated levels, current investment includes not only strategic positioning but also tactical short-term speculation, which can lead to increased volatility. Therefore, he expects gold prices to still have room to rise in 2026, but anticipates volatility will be greater than in 2025.
Regarding specific allocation advice, Deng Zhijie suggested that for investors with average risk tolerance, bonds could constitute 20% or 30% of a portfolio, global stocks around 40%, and gold approximately 5%. He noted that allocating too much to gold leads to excessive risk and lack of diversification, and since gold itself generates no earnings, holding a large amount is not advisable; a small allocation is reasonable.
Comments