First, let me state the conclusion: why I still stand on the long-term bullish side of gold.

If we only look at the short term, the recent performance of gold is not good at all. By April 2, 2026, spot gold had once dropped to about $4,612 per ounce on that day, and the total decline in March reached 11.8%, marking the worst single-month performance since 2008. On the surface, this seems like a collapse after reaching a peak; however, if we extend the time scale, you will find that the deeper logic has not been broken: the median of the Reuters survey regarding the average gold price in 2026 is still as high as $4,746.5 per ounce, Goldman Sachs has even raised its end-of-2026 target to $5,400, while J.P. Morgan maintains its judgment of $6,300 by the end of 2026. This indicates that the market's disagreement about gold is more about 'how it fluctuates in the short term' rather than 'whether it still has allocation value in the long term.'

My core judgment about gold is this: In 2026, gold is not simply a trading commodity, but a strategic asset being re-priced by the macro environment. In other words, the medium to long-term direction of gold prices is no longer just about whether the Federal Reserve will cut rates, but rather about whether three larger cycles resonate simultaneously: the interest rate and liquidity cycle, the sovereign debt and currency credit cycle, and the geopolitical and reserve asset reconstruction cycle. As long as these three major logics have not ended, the large-scale trend of gold is unlikely to easily conclude.

Second, the first layer of logic: What gold is experiencing is not a 'bear market,' but a 'macro shock pullback within a high bull market.'

Many people mistakenly believe that a sharp drop in gold means that the bullish logic has failed. However, this decline has a very clear driving chain: conflicts in the Middle East have pushed up oil prices, which in turn raises inflation expectations. These expectations lower market imaginations about the Federal Reserve's rate cuts, then the dollar and U.S. Treasury yields strengthen, ultimately pressuring gold, which is a non-yielding asset, in the short term. Reuters pointed out in an April 2 report that a key reason for the sharp drop in gold is market concerns that soaring oil prices will bring about longer-lasting and more stubborn inflation, thereby reducing the probability of the Federal Reserve cutting rates this year. In other words, this wave of selling is more like a pullback produced by the macro transmission chain, rather than a collapse of gold's long-term narrative.

Moreover, the current attitude of the Federal Reserve does not support the extreme view that 'the long-term logic of gold is dead.' The Federal Reserve explicitly stated in its March 18, 2026, statement that the uncertainty in the economic outlook remains high and specifically pointed out the bidirectional risks posed by the Middle East situation; at the same time, Reuters reported that the current Fed still maintains an interest rate range of 3.50%-3.75% and only hinted that there may be only one rate cut in 2026. This is certainly not the most favorable environment for gold in the short term, but the problem is that gold's long-term trend is not solely driven by the 'rate cut' button.

The World Gold Council provided a very important judgment in its 2025 study on 'whether fiscal concerns are driving gold': Over the past decade, gold and real interest rates have typically had an inverse relationship; however, since 2022, this relationship has been partially offset by other stronger forces. In other words, even if real interest rates are at a relatively high level, gold can still rise, because investors use it to hedge against more complex risks—such as geopolitical issues, fiscal deficits, asset valuation bubbles, and concerns about currency credit. This change is very crucial because it means that gold's pricing logic has transitioned from the 'single factor era' into the 'multi-factor resonance era.'

Third, the second layer of logic: What truly supports a long-term bull market for gold is the debt cycle and the currency credit cycle.

If you ask me, the biggest underlying logic for gold in the medium to long term in 2026 is not war, nor market sentiment, but the vulnerability of the fiat currency system being re-priced against the backdrop of excessively high global sovereign debt. The IMF's 2025 Global Debt Monitor shows that global total debt has reached $251 trillion, maintaining over 235% of global GDP. This means that in today's global macro environment, more and more economies are in a framework of 'high debt, slow growth, limited fiscal space, and unwillingness to keep interest rates high for long.' Such an environment is naturally friendly to gold.

Because in an era of high debt, policymakers often find it difficult to maintain high real interest rates for long periods. Once the economy slows down, fiscal pressures mount, and employment weakens, monetary policy will ultimately tend to be more accommodative; even if there is no immediate large rate cut, it may tolerate higher inflation in a more moderate manner, forming a kind of 'hidden financial repression.' And what gold is best at hedging against is precisely this environment where 'nominal currency remains, but real purchasing power is gradually diluted.' It is also because of this that gold often does not bottom out when the crisis actually erupts, but is continuously revalued after the market begins to realize that 'debt cannot be easily resolved.' This judgment is based on the IMF's debt data and the WGC's research on gold's driving factors.

Fourth, the third layer of logic: Central bank gold purchases are not emotional trades, but a gradual shift in the global reserve system.

One key point to pay attention to in gold for 2026 is that official buying has not disappeared. Data from the World Gold Council shows that global gold demand (including OTC) exceeded 5,000 tons for the first time in 2025; among them, net inflows into global gold ETFs reached 801 tons, marking the second strongest year in history, and central bank net purchases of gold reached 863 tons. Although lower than the extreme high of over 1,000 tons in the previous three years, it still far exceeds the annual average of 473 tons from 2010 to 2021. This level of demand cannot be explained by ordinary retail investor sentiment; it is institutional funds and official departments using real money to re-price gold.

More importantly, the central bank's attitude towards gold has not turned negative with new highs in gold prices. The WGC's 2025 central bank gold reserve survey shows that 95% of the interviewed central banks believe that global official gold reserves will increase in the next 12 months; 43% of central banks indicated that they would also increase their gold reserves, and no one expects to decrease them. The same survey also showed that 73% of respondents believe that the dollar's proportion in global reserves will decline in the next five years, while 76% believe that gold's proportion in reserves will increase. These sets of data carry significant weight because they indicate that gold is not waiting for 'retail investors to chase up,' but for 'the global reserve asset structure to continue to slowly lean towards it.'

This is also why I believe that gold's long-term rise is not just a 'hedging trade,' but more like a rebalancing of reserve assets. If the attractiveness of dollar assets declines marginally due to high debt, deficits, political risks, or sanction risks, then one of the most natural choices for central banks is to increase their allocation of gold. Gold has no counterparty credit risk, does not rely on a single country's fiscal credit, and has sufficiently deep liquidity. These characteristics, which were merely 'advantages' in the past, are increasingly approaching 'necessities' today. This judgment is consistent with the conclusions regarding crisis performance, reserve diversification, value storage, and the decline of the dollar's proportion from the WGC survey.

Fifth, the fourth layer of logic: The supply side has not given the bears much confidence.

Many commodity bear markets are often due to a significant expansion of supply. However, gold is not a typical high-elasticity supply product. WGC data shows that global mined gold production did reach a new high in 2025, reaching 3,672 tons, but the increase was very limited; at the same time, recycled gold only grew by 3%, indicating that even with a price surge, the supply side's response was not drastic. By March 2026, the WGC pointed out that many major gold mining companies were generally cautious about production prospects for 2026, with many companies expecting to be below 2025 levels. This means that gold price adjustments are more about fluctuations in funds and expectations rather than uncontrolled supply.

From a longer cycle perspective, this point is very important: Gold is an asset with a huge inventory, slow incremental supply, and a pattern that is difficult to change through large-scale short-term expansion. Therefore, once the demand for official reserves, ETF demand, and hedging demand simultaneously strengthen, the supply side is unlikely to suppress prices quickly like industrial goods. This determines that gold is more likely to experience 'sharp drops within a slow bull market' rather than a 'long-term bear market under supply pressure.' This is also a reasonable inference made in conjunction with the WGC's supply data and the production outlook for 2026.

Sixth, from the perspective of 'cycles,' why your view makes sense.

If I put gold in 2026 within a larger cyclical framework, I would understand it as three overlapping cycles:

First, it is the tail end of the interest rate cycle. Although current interest rates have not quickly declined, the market has already switched from the 'aggressive rate hike era' to the stage of 'staying at high levels and waiting for an opportunity to ease.' As long as growth pressure continues to accumulate, the suppression of gold by interest rates is more likely to be temporary rather than permanent. The WGC mentioned in its 2026 outlook that if the economy slows down and interest rates decline further, gold may gain moderate upward momentum; if a more severe recession combines with higher risks, gold may perform even stronger.

Second, it is the mid-late stage of the debt cycle. High debt means narrowed policy space, and it also means that real interest rates are very unlikely to remain high for long. The more the market realizes that 'debt issues cannot be tackled by high interest rates,' the easier it is for gold to achieve sustained re-pricing.

Third, it is the geopolitical and reserve system reconstruction cycle. From the sustainability of central bank gold purchases to the expectations of interviewed central banks regarding the decline in the dollar's proportion, and to the WGC's judgment that high official demand and ETF inflows will continue in 2026, all indicate one thing: gold is transforming from a 'cyclical hedging tool' into a 'long-term strategic allocation asset.'

Thus, the statement 'gold is bullish in the long term in 2026, and every sharp drop is a good opportunity to build positions' is fundamentally not an emotional slogan, but a viewpoint that can be supported by the macro framework. More accurately, it applies to a situation where as long as the sharp drop comes from short-term expectation re-pricing rather than the long-term logic being falsified, then the pullback is often an opportunity for medium- and long-term funds to rebuild positions. This is a way of thinking about 'inverse building positions in a structural bull market' rather than simply betting on a rebound.

Seventh, but this statement needs an addition: Not every sharp drop is suitable for full investment.

I agree that 'a sharp drop is an opportunity,' but I do not agree with interpreting it as 'buying heavily at any decline.' Because gold will still be impacted by oil prices, the dollar, yields, and policy expectations in the short term. Just like the adjustment in March 2026, gold did not drop because of a change in long-term logic, but rather because the market suddenly chose a stronger dollar and higher inflation expectations. Such declines could very well occur consecutively in the short term.

Therefore, a more mature expression should be: Gold is long-term bullish in 2026, and structural sharp declines are good opportunities to build positions in batches, but the premise is to approach it with a medium-term mindset and position management, and not with the mentality of betting on an absolute bottom. What truly suits gold is not the heroism of 'going all in,' but the patience of 'optimizing costs through volatility while the macro remains unchanged.' This conclusion is a comprehensive judgment I made based on the current macro environment, central bank buying, supply constraints, and the policy cycle.

Eighth, conclusion.

So, if I were to summarize gold in 2026 in one sentence, I would say:

Gold is not waiting for a perfect bullish factor, but is being increasingly recognized by more and more funds as a 'long-term safe asset' in a world of high debt, high uncertainty, and reserve system reconstruction.

In this larger context, sharp drops will certainly be painful, but precisely because it is painful, it is easier to leave room for long-term capital to enter.