Summary of Key Points
In 2026, international gold prices experienced a rollercoaster ride: from nearly $5,600 per ounce in January to less than $4,000 in June, a decline of 26%, and recently they have stabilized around $4,100. The factors behind this include the reversal of Federal Reserve (Fed) policies, the attraction of capital to the AI sector, and geopolitical events. At the same time, Asian investors and central banks have become important supporters of the gold market. The global pricing of gold is shifting from a Western-dominated system to a multi-polar one, with central banks continuing their trend of buying gold.
Detailed Analysis
1. Wild Price Fluctuations: Three Major Drivers at Play
The sharp fluctuations in gold prices this year have been driven by three main factors at different times:
- Fed Policy U-turn: At the beginning of the year, it was expected that the Fed would cut interest rates three times, increasing the attractiveness of gold (which generates no interest), leading to price increases. However, when the US-Iran conflict erupted and the new Fed chairman, Jerome Powell, took a tough stance on inflation (a "hawkish" approach), market expectations shifted towards rate hikes, causing US Treasury yields to rise (making it more profitable to save money or buy bonds), which pushed gold prices down. Now the market has accepted the expectation of at least one rate hike; if there are even more hikes in the future, gold prices will likely fall further. Conversely, if rates remain unchanged or even decline, gold prices might rise.
- AI Sector's Capital Draw: The AI sector in the US stock market has been particularly popular this year, attracting a large amount of capital. North American investors prefer to seek high returns in the stock market, diverting funds away from gold. As a result, North American gold ETFs (similar to gold funds) saw outflows in the first half of the year.
- Geopolitical Short-term Shocks: The initial US-Iran conflict caused a temporary rise in gold prices, but the market viewed it as a short-term event and quickly adjusted, failing to sustain the upward trend.
In simple terms: higher interest rates and a strong stock market mean lower gold prices; lower interest rates and a weaker stock market mean higher gold prices.
2. The Rise of Asian Influence: From "Gold Rush" by Individual Investors to Greater Pricing Power
An interesting phenomenon this year is that gold prices have mainly declined during European and American trading hours, while they have risen during Asian trading hours—because Asian investors buy at lower prices, supporting the market. This is no longer incidental. The Asian market has changed significantly compared to 2013, when Chinese individuals bought large amounts of gold:
- More Investment Options: In the past, Asians mainly purchased gold in the form of bars and jewelry. Now they have access to gold ETFs and derivatives (such as futures), allowing them to trade in real-time and influence global prices without waiting for months for the effects to be felt.
- Improved Infrastructure: Countries like Singapore and Hong Kong are developing systems for gold trading, clearing, and custody, aiming to become regional hubs for gold. With Asia accounting for 50%-60% of global gold demand, these developments help reflect supply and demand more directly, complementing London and New York in the pricing process.
Asia is no longer passively accepting Western-set prices but is actively participating in real-time price determination.
3. Central Bank Gold Purchases: Not a Short-term Strategy, but a Long-term Hedge
The trend of central banks buying gold continues globally, though their actions vary:
- Turkey's Approach: In the first quarter, when gold prices were volatile, the Turkish central bank sold 81 tons of gold to stabilize its currency exchange rate. After the market stabilized, it began considering purchasing more.
- Poland and South Korea's Increased Purchases: The Polish central bank bought 64 tons this year, with a target of 700 tons; the South Korean central bank had not purchased gold since 2013 and is now planning to invest in overseas gold ETFs.
- Strategic Considerations: Central banks buy gold for long-term hedging purposes, such as protecting against exchange rate fluctuations or geopolitical conflicts, or diversifying their dollar assets. According to a WGC survey, 89% of central banks believe global gold reserves will increase in the next 12 months, and 45% plan to increase their holdings.
Central bank purchases are like countries "storing emergency funds"; they provide stability regardless of short-term price movements.
4. For Individual Investors: Avoid Speculation, Use Gold as a Stabilizer
Ankai offers practical advice for investors:
- Don't Bet on Short-term Trends: It's difficult to predict short-term gold prices (geopolitical conflicts can happen at any time), so don't focus on daily fluctuations.
- Use Gold as a Portfolio Stabilizer: Incorporate gold into your investment portfolio (5%-10%). When the stock market falls, gold usually doesn't decline significantly, providing a buffer against risks.
- Support in Downward Trends: If gold prices drop too much, there are buyers such as jewelry stores and electronics manufacturers that use gold in their products, limiting potential declines.
In summary, gold price fluctuations in 2026 are the result of macroeconomic factors. However, the support from Asia and central banks has made the market more stable and globalized. For individuals, using gold as a "safety net" is a more reliable strategy than treating it as a speculative tool. In the future, gold pricing will become more diversified, with Asia playing an increasingly significant role.