Is now a good time to invest in gold?

Anyone who decided to invest in gold early in 2024 was well-rewarded, and the global instability that so far defined 2025 has continued the yellow metal’s strong run.

Gold prices increased 27% during 2024, driven by global uncertainty, particularly in light of the conflict in the Middle East and the run-up to the US presidential election, as well as gold purchasing by governments and central banks.

In 2025 to 19 June, gold prices gained a further 28%, putting paid to the notion that the gains for gold investors were over.

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For at least 6,000 years investing in gold has been seen as one of the surest ways of protecting wealth.

With UK inflation surging well past 3% in April and May, above the Bank of England’s 2% target, UK investors worried about the impact of inflation on their portfolios might be considering gold as one way of hedging against inflation.

"It's always a good time to buy gold," said Adrian Ash, director of research at BullionVault. "That might be for diversification, as risk insurance, an inflation hedge, a long term bull market, or because every time the stock market has lost value over extended periods of time (which is when it matters), the price of gold has risen."

Investing in gold has the potential to provide a source of growth as well as to protect the value of a portfolio. So is now the time to buy gold?

Does the Middle East conflict mean you should buy gold?

Tensions in the Middle East have simmered over the past two years and now look increasingly likely to boil over, as Israel and Iran have traded missile attacks through much of June.

“People across the world have woken to worrying news coming out of the Middle East, as Israel has launched a military attack on Iran,” Rick Kanda, managing director at The Gold Bullion Company, said. “In most cases, geopolitical events have damaging impacts on stocks and investments; however, this isn’t the case for gold.

“Global geopolitical tensions and trade uncertainty have put the price of gold in a strong position over recent years, with many experts believing there has never been a better time to invest in the metal,” Kanda added – though he also clarified that “any investment choice isn’t to be made lightly”.

Gold prices fell in the week to 20 June, leading some commentators to suggest that the bull run is running out of steam.

“Gold’s rally shows fatigue as it heads towards weekly losses, putting the bullish bias in jeopardy,” Nikos Tzabouras, senior market analyst at Tradu.com, said.

The Fed’s decision to hold interest rates steady bolstered the US dollar’s status as a safe-haven asset, creating “an unfavourable backdrop for non-yielding assets like gold”.

“Nonetheless, gold is likely to remain a preferred risk-off refuge as the de-dollarisation trend continues,” Tzabouras added. “Hostilities between Israel and Iran persist, and US President Trump has left the door open to potential US involvement, which could broaden the conflict.”

Can gold diversify your portfolio?

“When bond yields stand at higher levels, shares and fixed income investments tend to track each other higher and lower,” Tom Stevenson, investment director at Fidelity International, tells MoneyWeek. “That reduces the incentive to own a mixture of both bonds and shares. And it means that investors need to look further afield, into commodities and property, to gain that portfolio balance.”

Gold, by contrast, has “low-to-negative correlation to equities”, according to Raymond Backreedy, chief investment officer at Sparrows Capital. It also typically sees lower drawdown rates, which Backreedy says is “particularly desirable especially in times of market stresses”.

While it is of course not guaranteed to persist, there is some rationale behind the relationship.

“Historically, gold has a proven track record of performing well during economic uncertainty and global conflicts due to its intrinsic value, which is why many investors see gold as a safe haven,” said Kanda. “During times of conflict, investors steer away from investing in assets such as stocks and bonds, as geopolitical events often threaten the infrastructures supporting these assets.”

While BullionVault itself doesn’t make gold price predictions, it polls its customers for their views twice per year. The result of the most recent survey – in December 2024 – indicates that BullionVault customers expect the gold price to reach $3,070 by the end of 2025, implying an increase of 17.6% from the end of 2024.

Is AI driving gold demand?

Often it’s the macroeconomic factors that determine the gold price, especially the rate of US inflation.

Gold is therefore often viewed as a commodity with no industrial applications, in contrast to silver which serves a multitude of important purposes in industry. Lots of investors in fact trade the two metals based on the gold-silver ratio which tracks the relative price of gold to silver. (At the time of writing, the gold-silver ratio is around 90; values above 80 have historically preceded strong rallies in the silver price.)

Gold is, though, an important raw material in some industries, one notable example being electronics. Gold is a superb conductor of electricity, and is therefore frequently used in high end electronic devices. There is almost certainly some gold in the device you’re using to read this article.

As prices rose between 2001 and 2011, electronics manufacturers sought ways to move away from gold, with demand for gold in electronics peaking in 2010.

However, according to the World Gold Council, artificial intelligence (AI) is helping to prompt a recovery in this market. The processors, memory chips and sensors which are being deployed at vast scale to build the data centres that train models like ChatGPT all use gold in their construction.

“Gold's superior conductivity ensures that data can be processed and transmitted at high speed with minimal energy loss,” wrote Louise Street, senior markets analyst and Trevor Keel, consultant, at the World Gold Council. “Furthermore, gold's resistance to corrosion ensures component longevity and durability – critical for continuous and intensive AI applications.”

Is now a bad time to invest in gold?

On the other side of the ledger is the fact that gold has seen a sustained period of gains, which might lead investors to consider whether it is a good time to buy gold.

Gold prices have gained 44% in dollar terms over the past 12 months, outperforming the S&P 500 during that time. Gold is currently trading near its all-time highs – and “all-time”, for gold, goes back a long way.

"Gold's current record-breaking bull market has clearly pulled in speculative traders betting that these price gains will continue," says Ash.

Those who have held gold during this period could be tempted to take some profit on their gains by selling off a small portion of their allocation. Those who haven’t might feel that now isn’t the best time to dive in, given that gold is trading at almost the highest level in its history.

The caveat to this is that, over the millennia it has been traded, gold has consistently trended upwards over the long run. In other words, gold is often trading at all time highs, and when it drops below them, it usually comes back to exceed them again eventually.

Runs like these are never guaranteed to run into perpetuity, but in gold’s case, there is a lot of trading history to look at, and it mostly goes in one direction over the long term.

"For new investors, the price you missed doesn't matter. What counts for today's buyers is what gold's track record says it could do when the next crisis strikes,” says Ash.

How much gold should you buy?

If you do decide that now is the time to buy gold, the final question is how much gold to buy.

Given the fact it pays no interest and has a historical tendency towards volatility, few experts advise investing a substantial part of your portfolio into gold.

When building multi-asset portfolios, “we typically allocate 3-10% [to gold] using the gold ETCs available on the market, depending on user case and overall percentage allocated to the defensive asset class”, said Backreedy.

“It's better to take a long term view on portfolio construction and outcomes, and from this perspective, gold can act as a compliment to fixed income from a defensive perspective and as a portfolio diversifier.

“As such, we look to the above benefits of gold over the long term, rather than focusing on the short term price.”