Is now a good time to invest in gold?
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Gold is prized by some investors because of its qualities as a store of value and a hedge against global instability, but the tumultuous geopolitics of 2026 put the brakes on what had been a promising gold rally.
Gold enjoyed its best year since 1979 last year. The price of gold rose 64% through 2025, and kept going early in 2026, hitting an all-time high of $5,595 per troy ounce on 29 January.
But despite its safe haven appeal, gold prices fell as war broke out in Iran – and haven’t recovered since.
Between 27 February, the last trading day before the Iran war started, and 16 August, the price of gold fell 17.2%.
Despite this, during the height of the Iran conflict, British investors regarded gold as the best investment available. Charles Schwab UK’s annual Investment Forces survey, conducted in March and surveying 1,000 nationally representative investors, found 73% of respondents rated precious metals as the best investment option available and 64% expected its value to increase over the following 12 months.
Investors might be taking a longer-term view of what gold could mean in their portfolio, according to Charles Schwab UK’s managing director Richard Flynn.
“Gold’s appeal has never been solely about short-term price movements,” he said. “Our research shows that investors continue to view it as an important portfolio diversifier and a potential store of value during periods of economic and geopolitical uncertainty. While gold has experienced periods of weakness this year, that does not necessarily undermine the role it can play within a well-diversified portfolio.”
The impact of interest rates on gold prices
Gold prices are being weighed on by higher US interest rate expectations in the wake of the conflict. The Federal Reserve (Fed) – the US’s central bank – had been engaged in a steady rate-cutting cycle in the run-up to the war, but the inflationary shock that followed has stalled this trend.
The Fed held rates steady at its April, June and July meetings, and some believe it may be forced to start raising interest rates. Higher interest rates are negative for gold’s price performance.
Research from physical gold custodian BullionVault suggests that precious metals investors believe interest rates are currently acting as the primary driver of gold price movements.
In BullionVault’s latest investor survey of 953 precious metals investors, conducted between 27 June and 7 July, 28% said they think monetary policy will have the biggest impact on precious metals prices in the second half of 2026.
“That’s quite a shift in thinking from the past two years, when Trump‘s election campaign, victory and return to the White House threw geopolitics into the spotlight,” said Adrian Ash, director of research at BullionVault. “Gold has long been seen as the asset that rallies on crisis, yet investors today say it’s monetary policy that matters most.”
On average, the survey’s respondents predicted that gold prices would rise to $4,665 by the end of the year.
“Rather than seeing [the recent pullback] as evidence that bullion has lost its safe-haven appeal, most simply see investors banking profits after a remarkable run, alongside markets adjusting to changing expectations for monetary policy,” said Ash.
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.
While short-term headwinds like a stronger dollar and higher bond yields have worked against gold prices, longer-term structural drivers that have driven higher gold prices remain intact.
“I don’t think that, behaviourally, gold is broken,” said Nitesh Shah, head of commodities and macroeconomic research at asset manager WisdomTree. “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.
Charles Schwab UK’s Flynn says that whether the recent pullback represents a buying opportunity or not depends on your individual objectives, time horizon and the makeup of your portfolio.
“Investors are not simply choosing between defence and growth,” said Flynn. “Many are continuing to hold positive views on gold while also increasing exposure to themes such as artificial intelligence, suggesting a desire to balance resilience with long-term growth opportunities.”
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.
Gold for diversification
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.