Is now a good time to invest in gold?
Gold prices fell during March following the outbreak of the conflict in the Middle East. Does that mean now is a good time to invest in gold?
Gold investors, when asked to present the case for buying the yellow metal, tend to point to its qualities as a store of value and a hedge against tumultuous world events.
This was a big part of the theory that saw gold enjoy its best year since 1979 during 2025. Gold prices rose 64% through the course of the year, and kept going early in 2026, hitting an all-time high of $5,595 per troy ounce on 29 January.
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Between 27 February, the last trading day before the Iran war started, and 26 March, the price of gold fell 16.5%.
“Gold has fallen back below $4,500 per ounce, around $1,000 lower than the peaks seen at the end of January,” said Derren Nathan, head of equity research at Hargreaves Lansdown.
Why has gold sold off like this, just when the kind of turmoil it is supposed to protect against is at its worst? And with that in mind, is gold still a good investment – and is now a good time to buy?
Why has the gold price fallen?
The point of safe haven assets is to provide a source of liquidity when it is needed.
As stock markets have fallen through the course of the Iran war, this has put pressure on people of all types – traders, investors, and everyday consumers – to cash in what they can in order to cover the shortfall.
Gold is a prime candidate. It is a highly liquid asset, and its rapid gains last year and early in 2026 meant that there were profits to be made from selling it.
In the run-up to reaching all-time highs around $5,600 in January, gold gained around $1,000 in about a month. “Normally, it takes years to gain $1,000 on gold,” said Nitesh Shah, head of commodities and macroeconomic research at asset manager WisdomTree.
A selloff from what Shah calls January’s “unsustainably high levels” had begun in February, but the fallout once the war began accelerated this.
“A traditional phenomenon in geopolitical shock events is that usually, when the shock event happens, gold prices initially fall,” said Shah. This happened after various historical stock market crashes, including 9/11 and the global financial crisis in 2008.
“The mechanism here is that gold is a liquid, cash-like investment. When there is stress in the market, people need to unlock that liquidity,” said Shah.
Gold prices are also being weighed on by higher US interest rate expectations in the wake of the conflict.
“The inflationary impact of the oil market dislocation has increased the probability of a [Federal Reserve] rate hold until at least October from around 11% to 62% over the last month,” said Hargreaves Lansdown’s Nathan. “Markets now see a 38% chance of at least a quarter-point rise, and when it comes to the possibility of a cut, all bets are off.”
Higher interest rates, particularly in the US, are typically a headwind for gold, which pays no interest and as such diminishes in appeal relative to bonds when rates rise.
Is there a buying opportunity for gold?
The big question is how this affects the investment thesis for gold, particularly its status as a safe haven.
“I don’t think that, behaviourally, gold is broken,” said Shah. “If gold is supposed to be a highly liquid asset, then it’s doing its job.”
The gold landscape today is characterised, relatively speaking, by broader sources of demand than in the past: Chinese insurance companies and Indian pension funds have become eligible gold buyers since the start of last year, while the rise of gold-backed tokens like Tether gold mean that digital asset managers are now buying up gold in large quantities.
All of that suggests that the recent selloff could constitute a buying opportunity for would-be gold investors.
“When prices fall this much, it’s a good time to buy, especially if you were considering buying in the months prior to that,” said Shah.
Gold for diversification
One of the most compelling arguments for investing in gold is the diversification that it can offer to a portfolio.
“When bond yields stand at higher levels, shares and fixed income investments tend to track each other higher and lower,” says Tom Stevenson, investment director at Fidelity International. “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.
An allocation to gold within a portfolio can therefore act as a source of diversification during certain market conditions.
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.
