Is gold a good investment in 2025?

Whether used to diversify portfolios, manage inflation exposure or respond to short-term price movements, gold maintains a defined role within global financial markets.

Gold has been used for millennia as a store of value and a medium of exchange. Today it serves a broad range of purposes, from jewellery and technology to investment and portfolio diversification. Its price movements are influenced by a mix of economic factors – including inflation trends, central-bank policy, and investor sentiment – making it one of the most closely watched commodities in global markets.

So, with gold trading at record highs in 2025, many investors are asking the same question: is gold still a good investment right now?

Gold price history

The gold market has been on an extraordinary run through 2025. Spot gold prices hit multiple record highs, climbing above $3,500/oz in April and extending gains into the second half of the year. According to Capital.com data, gold was trading at around $4,060/oz on 17 November 2025, after reaching intraday highs above $4,300/oz in October.

Reuters reported that April’s surge was driven by strong safe-haven flows and rising investment demand, as market participants looked for protection amid uncertainty over inflation, geopolitical tension and global growth. The CME Group noted that traders used futures-implied probabilities to reassess the likely path of US interest rates – a key factor that historically affects gold through real yields and the US dollar.

Past performance is not a reliable indicator of future results.

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What are the main uses of gold?

Gold demand is underpinned by three main areas: jewellery, investment, and industrial applications.

Jewellery

This remains the single largest component of physical gold demand, led by China and India, where gold has strong cultural and traditional importance. Seasonal buying during wedding and festival periods continues to be a major influence on global consumption.

Investment

This segment includes physical bars and coins, exchange-traded funds (ETFs) backed by bullion, and derivatives such as futures. Investors often turn to gold to diversify portfolios, hedge against inflation, or protect against financial-market turbulence.

Technology and industry

Gold’s unique conductive properties make it valuable in electronics and industrial applications, with demand recovering since 2024 thanks to rising production in AI hardware and high-performance computing.

Gold as an investment

Gold is often included in strategic asset-allocation frameworks because of its distinctive role as a diversifier. It historically shows low correlation to equities and some bonds, helping to offset portfolio risk during periods of market stress.

The WGC identifies three main attributes of gold within a portfolio:

• Diversification – Gold tends to move differently from traditional assets such as equities and fixed income.
• Liquidity – Gold trades in deep, liquid markets across physical, futures and ETF segments.
• Potential risk mitigation – Gold has often performed well during times of financial instability or rising inflation expectations.

A typical strategic allocation is often discussed in the 5–10% range, although this varies according to an investor’s goals, time horizon and risk appetite. Importantly, gold is priced in US dollars, so fluctuations in the dollar or in real interest rates can affect returns for holders in other currencies.

That said, gold can also be volatile. It may experience sharp corrections after strong rallies, and holding costs or tracking differences can vary depending on the investment route chosen. As always, past performance does not guarantee future results.

What’s driving the gold market in 2025?

A number of overlapping factors are shaping gold’s performance this year.

1) safe-haven demand and macro uncertainty

Periods of geopolitical tension, uneven disinflation, and fragile economic growth have supported gold’s appeal as a hedge against uncertainty. Throughout 2025, investors sought protection from potential stagflation risks – a scenario combining sluggish growth and stubborn inflation.

Investment inflows into gold-backed ETFs and coins have remained strong, while retail demand in some regions, particularly in Asia, has surged during episodes of volatility. Even as jewellery demand softened slightly in mid-2025, overall investment appetite remained resilient (Reuters).

2) central-bank buying

The official sector continues to play a major role in the gold market. The WGC reported robust net central-bank purchases through 2025, as monetary authorities diversified their reserves away from the US dollar and other fiat currencies.

Surveys of reserve managers suggest that many central banks expect to increase gold holdings further over the next five years – a continuation of a trend seen since 2018.

3) rates and the US dollar

Gold’s relationship with interest rates and real yields remains crucial. When real yields (nominal yields adjusted for inflation) fall, gold tends to become more attractive relative to cash and bonds.

Following the Federal Reserve’s September 2025 rate cut, markets reassessed the pace of potential easing into 2026. If the Fed continues to reduce rates, lower yields could favour non-yielding assets such as gold. However, unexpected shifts in inflation or policy could create volatility in both directions (CME Group).

4) regional investment trends

Growing retail and institutional participation in Asia, especially in China, has been another defining feature of 2025. Reports from Reuters and the Financial Times highlighted China-related demand as a key driver during gold’s rally, with both private investors and official entities accumulating reserves.

Elsewhere, European and Middle Eastern demand has remained steady, supported by persistent inflation and geopolitical concerns.

Risks and volatility

While the long-term case for gold remains robust, the short term carries risks. Rapid price appreciation can invite profit-taking and sharp corrections. A stronger US dollar, renewed inflation surprises, or a slower-than-expected pace of rate cuts could all weigh on sentiment.

It’s also worth noting that liquidity can vary across different investment vehicles. Physical holdings may involve storage and insurance costs, while ETFs and derivatives can introduce tracking or counterparty risks.

For those considering exposure, it’s essential to assess time horizon, risk tolerance, and portfolio context rather than attempting to time short-term swings.

Portfolio role and practical routes

Gold can serve multiple roles in a balanced portfolio:

• Diversifier – helping to reduce overall volatility during periods of equity stress.
• Inflation hedge – potentially preserving purchasing power over the long term.
• Crisis insurance – providing a buffer in extreme market conditions.

There are several ways to gain exposure:

• Physical gold – bars and coins offer direct ownership but may involve additional costs.
• Exchange-traded funds (ETFs) – provide convenient access, often tracking spot prices.
• Mining equities – Gold mining stocks can provide leveraged exposure to gold price movements, though with added operational risk.*

*Leverage amplifies both profits and losses.

Each method carries distinct cost, liquidity and tax considerations. The World Gold Council’s research provides detailed comparisons of these characteristics for different investor profiles.

Is gold a good investment in 2025?

Whether gold is a suitable investment right now depends on your individual objectives, risk appetite and time horizon. The backdrop in 2025 includes:

• Record-high gold prices and occasional sharp swings.
• Robust investment demand amid macro and geopolitical uncertainty.
• Ongoing central-bank accumulation of gold reserves.
• A potentially looser US monetary policy outlook heading into 2026.

Given these dynamics, many investors view gold not as a return-maximising asset, but as a strategic diversifier within a broader portfolio. A balanced approach – combining independent research, clear entry and exit plans, and disciplined position sizing – can help manage exposure more effectively.

Key takeaways

Gold’s long history as a store of value ensures it remains central to discussions about wealth preservation and diversification. However, as with all investments, timing, context and personal circumstances matter.

Short-term moves are inherently difficult to predict. Monitoring macroeconomic data such as inflation, bond yields and currency trends, as well as central-bank activity, can help form a better-informed view.

Above all, it’s vital to remember that gold can be both defensive and volatile – a powerful combination that requires respect, not speculation.

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