Where next for gold?

Important information - investment values and income from investments can go down as well as up, so you may get back less than you invest.

Another year, another record for gold. The metal has climbed above $4,800 for the first time in its history, extending 2025’s record-breaking rally. 

What is going on? And - more importantly - can it continue?

Why is the gold price rising?

Gold is a strange investment. When you buy stocks or bonds, the price you pay is linked to the cash they’re expected to produce. But gold doesn’t generate any cash. In the words of Warren Buffett, it does nothing “except look at you”.

Instead, the price of gold reflects what people think will happen on the world stage and in the global economy.  Often, price movements are unexpected and slightly mysterious - despite the best efforts of analysts. At a broad level, however, gold is used as a hedge against things investors are scared of, including:

• A falling US dollar. The value of the dollar slumped against lots of major currencies in 2025, and some think it will weaken further this year. As a result, investors don’t want to own as many dollar-denominated assets. Instead, they want alternative stores of value - such as gold.  This is known as the ‘debasement trade’.
• Interest rate changes. US interest rates were cut in 2025 and are on course to come down further this year. This makes assets like cash less enticing, while gold - which offers no income - becomes more attractive in comparison.
• Global conflict. Research by the World Gold Council has found a “direct connection” between gold and geopolitics. The trade association argues that a 100-point increase in the Geopolitical Risk Index pushes the gold price up by 2.5% in the short term. Tension was high in 2025, with regional conflicts in the Middle East and Ukraine, and growing competition between the US and China. Meanwhile, 2026 has kicked off with a row between the US and Venezuela, and protests in Iran.
• Frothy stock markets. Investors are worried about an AI bubble, as US stock market valuations continue to rise. One way to diversify your portfolio is to buy alternative assets, such as gold. Typically, gold and equities have an inverse relationship. This is not always the case, however, as we saw in 2025, when both assets climbed.

For the reasons above, gold is often described as a ‘safe haven’. This does not mean it is a risk-free investment, however. Bullion has a habit of surging in value before sinking again.

Indeed, part of gold’s recent success can be attributed to momentum. As bullion has shot up, more investors have wanted a piece of the action, pushing the price even higher. History shows that momentum can quickly kick into reverse.

• Watch: Gold price surge - is it too late to gain?

What role do central banks play?

So far, we’ve focused on investors. But something else has been boosting the gold price too: central banks.

Central banks - such as the Bank of England and the Federal Reserve - are public institutions responsible for managing countries’ money and financial systems. In order to do this, they hold ‘reserve assets’, consisting mainly of US dollars, euros and gold. A lot of this gold - 400,000 bars worth - is stored under the City of London in an enormous vault.¹

Central banks have significantly increased the amount of gold they have been buying in recent years, amid fears about the US dollar. This has helped to prop up the price.

Can gold keep rising?­

Predictions for the year ahead vary widely. On average, analysts think bullion will reach $4,610 per troy by the end of the year, according to analysis by the Financial Times.² (A troy ounce is a unit used for precious metals and is slightly heavier than normal ounce. It is thought to derive from the French town of Troyes, which was a trading hub in the Middle Ages.)

George Cheveley, portfolio manager of Ninety One Global Gold, is bullish.

“If I look at interest rates, the dollar, geopolitics, economic uncertainty - it all feels supportive to the gold price. And central banks are continuing to buy,” he told Fidelity.

“I probably go through these arguments in my head once a week. Currently my conclusion is: it feels like gold is either going to stay here or go higher. The chances of it going substantially lower - below $4,000 or $3,500 - feels like the least likely case.”

J.P. Morgan is also feeling cheerful. “While this rally in gold has not, and will not, be linear, we believe the trends driving this rebasing higher in gold prices are not exhausted,” said Natasha Kaneva, head of global commodities strategy.

“The long-term trend of official reserve and investor diversification into gold has further to run.

Not all analysts agree though. “The next 12 months, we actually don't see gold moving higher,” Citi analyst Max Layton said in December. “And the core driver of that is that we think U.S. growth sentiment will turn higher.”

“Basically, we think President Trump's already pivoted toward trade deals, toward peace deals, and toward tax deals.”

• Read more: What is the best way to invest in gold - ETFs or gold miners?

How can I invest in gold?

There are three main ways to invest in gold.

• Buy physical gold. Physical gold, in the form of bars, coins and jewellery, is sold by organisations like the Royal Mint. Such investments come with extra costs and complications, however, like insurance and storage.
• Buy an ETF. Exchange traded funds are listed on stock exchanges and bought and sold like shares. The best will mirror movements in the gold price very closely and do so for a low charge. These are often described as ‘physical’ gold ETFs, meaning they are backed by actual gold held in vaults. One that features in Fidelity’s Select 50 is iShares Physical Gold.
• Invest in gold miners. There are various funds that hold precious metal miners, including Ninety One Global Gold and Jupiter Gold and Silver. Miners offer exposure to the price of bullion - but there’s a lot more to think about than that. These companies tend to generate more volatile returns, meaning they will sometimes do better than the gold price - as in 2025 - and sometimes do worse.

• Read: What is the best way to invest in gold - ETFs or gold miners?
• Read: Top 10 best-selling ETFs on 2025
• Read: Tom Stevenson’s fund picks for 2026

Source:

¹Bank of England, 15.10.20

²FT, 3.1.26