Is now the right time to buy gold? A comprehensive analysis of the 2026 entry opportunity

This is the most urgent question in many investors’ minds. As gold prices soared from over $2,000 at the beginning of 2024 to above $5,000 in February 2026, with a cumulative increase of over 150%, market enthusiasm continues to grow. But whether it’s suitable to enter now depends on your investment goals, risk tolerance, and understanding of market dynamics. Let’s start by discussing the fundamental reasons behind the rise in gold prices, then address the timing choices for different investors.

The Five Main Drivers Behind the Gold Price Surge

To determine if now is the right time to buy, first understand why gold is rising. The strong gold prices over the past two years are not accidental but the result of multiple structural factors reinforcing each other.

1. Market Uncertainty from Trade Protectionism

Frequent changes in tariff policies directly triggered the 2025 gold rally. When markets face policy risks, risk aversion increases, and funds flow into gold. Historical experience shows that during periods of policy uncertainty, such as the US-China trade war in 2018, gold prices tend to rise by 5–10%. By 2026, regional trade frictions still exist, remaining a key factor supporting gold prices.

2. Gradual Erosion of Confidence in the US Dollar

Expanding US fiscal deficits, frequent debt ceiling debates, and the accelerating de-dollarization trend worldwide have shifted capital from dollar assets to hard assets over the long term. This is not a short-term phenomenon but a structural shift—when confidence in the dollar wanes, gold priced in dollars benefits.

3. Federal Reserve Rate Cuts Provide Space

Fed rate cuts weaken the dollar and reduce the opportunity cost of holding gold, increasing its attractiveness. Historically, each rate-cut cycle has seen significant gold price increases (e.g., 2008–2011, 2020–2022). If further rate cuts of 1–2 times are expected in 2026, this will strongly support gold. Interestingly, some rate cut announcements have initially caused gold to dip, often because markets have already priced in the expectations or due to hawkish Fed speeches. Tracking the probability of rate cuts via tools like CME FedWatch is an effective way to gauge short-term trends.

4. Elevated Geopolitical Risks

The ongoing Russia-Ukraine conflict, escalating Middle East tensions, and regional instability keep safe-haven demand high. Such events often cause short-term spikes in gold prices. In 2025–2026, these factors remain, amplified by fragile global supply chains.

5. Central Banks Continue to Increase Gold Holdings

According to the World Gold Council (WGC), in 2025, global net central bank gold purchases exceeded 1,200 tons, marking the fourth consecutive year over a thousand tons. The report shows that 76% of surveyed central banks expect their gold reserves to “moderately or significantly increase” over the next five years, with most expecting a decline in dollar reserves. What does this mean? Central banks’ gold buying reflects a long-term skepticism of the dollar system, and this trend is unlikely to disappear soon.

What Other Factors Are Driving Gold Prices Higher?

Beyond the five main drivers, these factors also play a role:

Global Debt and Sticky Inflation. By 2025, global debt reached $307 trillion (IMF data). High debt limits interest rate policy flexibility, leading to accommodative monetary policies and lower real interest rates, which boost gold’s appeal.

Stock Markets at Historic Highs with Concentrated Risks. Currently, few stocks lead the market, increasing portfolio concentration risks. This doesn’t mean a stock market crash is imminent, but disappointment could have outsized consequences. Many investors hold gold for portfolio stability.

Media and Social Media Effects. Continuous media coverage and social sentiment have driven short-term capital inflows, causing sustained price increases.

More Flexible Trading Methods. Investors now prefer dynamic trading over static holdings, increasing interest in instruments like XAU/USD, which allow for active position adjustments without long-term lock-in.

When Is the Right Time to Enter? Three Entry Points for Retail Investors

After understanding the logic behind the rally, the key question is: When is the right time to buy gold? The answer depends on who you are and your investment horizon.

If You Are a Short-Term Trader

Volatility creates excellent opportunities for short-term trading. Market liquidity is good, and short-term direction is relatively easier to judge, especially during sharp rises or falls, where bullish or bearish momentum is clear. If you’re experienced, now might be a good chance to ride the wave.

But remember: start small, test the waters, and avoid blindly increasing positions. Losing your mindset can lead to significant losses. Using economic calendars to track US economic data can help inform trading decisions.

If You Want to Buy Physical Gold for Long-Term Preservation

Be mentally prepared for significant fluctuations. While the long-term trend is upward, enduring volatility is essential to consider. Additionally, physical gold has higher transaction costs (5–20%), which should be factored into your decision.

If You Want to Allocate Gold in Your Portfolio

It’s feasible, but remember that gold’s volatility is higher than stocks. Putting all your assets into gold is unwise; diversification is safer. Generally, 10–15% of your total assets in gold is recommended, adjusted according to your risk tolerance.

Advanced Strategy: Long-Term Holding + Short-Term Trading

If you have experience and risk management skills, you can hold long-term while trading short-term swings, especially around major US economic data releases when volatility spikes. This requires disciplined trading systems and clear stop-loss rules.

Three Risks You Must Understand Before Entering

Before buying gold, be fully aware of these three risks:

1. Volatility Comparable to Stocks. Gold’s annual average amplitude is 19.4%, compared to 14.7% for the S&P 500. Volatility isn’t necessarily bad but requires resilience.

2. Long Cycles. As a store of value, gold tends to realize its value over a decade or more. During this period, prices can double or halve. Don’t expect stable short-term returns.

3. Entry Timing and Costs. Physical gold transactions incur 5–20% costs; entering now requires careful consideration. Derivatives like XAU/USD have lower costs but involve leverage risks.

Central Bank Gold Buying Sends a Long-Term Signal

Since the surge in 2022, central bank gold purchases haven’t stopped. Why are they increasing holdings? What does this reflect?

Simply put, central bank gold buying signals a long-term doubt in the dollar system. Amid de-globalization and geopolitical tensions, central banks diversify reserves with gold to hedge risks and protect currency purchasing power. This isn’t a short-term move but a strategic adjustment.

WGC data shows most central banks expect their gold share to rise and dollar share to fall over the next five years. As long as inflation persists, debt remains high, and geopolitical tensions continue, central bank gold accumulation will persist, pushing gold prices higher.

Will There Be More Upside in 2026? Institutional Forecasts

By February 2026, spot gold (XAU/USD) has stabilized above $5,150–$5,200 per ounce, with a 2025 gain of over 60%, and an 18–20% increase since the start of the year. The upward momentum shows no signs of weakening.

Most analysts are optimistic about the rest of 2026. Here are the main institutional forecasts:

Consensus Expectations:

• Average price in 2026: $5,200–$5,600 per ounce
• Year-end target: typically $5,400–$5,800, with optimistic forecasts reaching $6,000–$6,500
• High-end predictions: some institutions (e.g., Societe Generale, independent strategists) suggest that geopolitical escalation or a sharp dollar decline could push prices above $6,500

Major Bank Forecasts (as of late January 2026):

Goldman Sachs: Raised year-end target from $5,400 to $5,700, citing ongoing central bank buying and declining real yields as support.

JPMorgan: Projects reaching $5,550 in Q4, driven by ETF inflows and safe-haven demand.

Citi: Average second-half price of $5,800, with risks of rising to $6,200 if recession or inflation re-emerges.

UBS: Conservative estimate of $5,300 by year-end, but acknowledges that accelerated rate cuts could raise the target.

WGC / LBMA: Current average forecast around $5,450, significantly higher than earlier projections for 2026.

Conclusion: Is Now a Good Time to Buy Gold?

On the surface, rate cuts, inflation, and geopolitical risks are pushing gold higher. But the deeper driver is the long-term fracture in the global credit system, with gold serving as a hedge against systemic risks.

This trend won’t suddenly disappear in 2026. Because inflation remains sticky, debt pressures persist, and geopolitical tensions continue, central banks will keep increasing gold holdings, supporting higher prices. The bottom of gold may keep rising, with limited downside in a bear market and strong momentum in a bull market.

However, remember that gold’s rally is never a straight line. In 2025, expectations of Fed policy adjustments caused a 10–15% correction. If real yields rebound or crises ease in 2026, volatility will likely continue.

So, when is the right time to buy gold? Not chasing highs but choosing appropriate entry points and methods based on your goals:

• Short-term traders: Opportunities now, but require discipline and systems
• Long-term preservers: Consider phased entry, prepared for volatility
• Portfolio allocators: Use gold as a hedge, but keep proportions reasonable
• Cautious investors: Wait for clear signals or pullbacks

Regardless of your approach, the key is to monitor markets systematically rather than follow blindly. Understanding your investment timeline and risk appetite is more important than trying to predict short-term price movements.