Investors are flocking to the classic ‘safe haven’ of gold in response to political and economic turbulence, with the precious metal even outpacing the so-called 'Magnificent Seven' tech stocks over the past 12 months.
Here, Which? explains what’s behind the spike in the price of gold – and whether you should consider investing.
Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of a provider before committing to any financial products.What’s behind the surging gold price?
Investors have traditionally viewed gold as a safe investment – it tends to do well during more turbulent times because people perceive it as a reliable store of value.
‘This matters at the moment because times don’t get much more turbulent than this,’ said Victoria Hasler, head of fund research at Hargreaves Lansdown.
‘Between a new president in the US bringing threats of trade wars, geopolitical instability in the Middle East and Ukraine and newly emerging competitors threatening US tech giants, investors are more than a little jittery.’
Over the course of 2024, the price of gold outpaced both shares and UK government bonds. Retail investors now hold some 45,000 tonnes of gold bars and coins, according to the World Gold Council.
Central banks have also been buying up gold in large quantities as they look to diversify away from the US dollar, helping drive the price up even higher.
‘While I’m not going to try to predict the price of gold, the current drivers remain intact and I can’t see them diminishing in the near future,’ said Hasler.
Gold price per troy ounce, 2025 ($)
What are the benefits of investing in gold?
Gold behaves differently to the wider stock market. When the wider market is doing well the price of gold tends to rise, but when markets fall it often increases too.
Having some of your overall investment portfolio put into gold will mean you’re better diversified in case the stock market takes a hit.
Plus, unlike investing directly in shares, you can invest in bullion bars without paying any stamp duty.
Find out more:What are the downsides?
Unlike shares, the price of gold isn’t linked to any kind of performance or profit – instead it’s about supply and demand. Investors are currently keen on gold, but if it falls out of favour, your investment will take a significant hit.
Nor do you get any dividend payments if you invest in gold, so won’t see any money back from your investment until you sell it.
If you’re buying physical gold, you run the added risk of losing the value of your investment if you fail to properly store or insure it.
Gold mining also causes significant environmental damage – both through the energy required to carry it out and the damage caused at mining sites through mercury and other chemical pollution.
Find out more:How to buy gold
You can buy physical gold in the form of bullion coins or bars. It’s best to buy from a reputable seller to avoid scams – sovereign mints such as the Royal Mint are government regulated.
However, physical gold carries a premium price because it also covers production and design costs. A single Britannia 1oz bullion coin from the Royal Mint will set you back £2,484 at the time of writing.
As an alternative, you can invest in an exchange-traded commodity (ETC) or exchange-traded fund (ETF) that tracks the price of gold. You can buy these through investment platforms or within a stocks and shares Isa.
As an example, Hargreaves Lansdown highlights the 'iShares Physical Gold' ETC, which tracks the gold spot price and is currently trading at £45.37 per share.
Additionally, there are funds that have some limited exposure to gold if you don’t want to go all in.
You can also invest in shares of gold-mining companies, although the price of these shares will be affected by other factors such as local politics and mining output.
Investing in gold won't be the right option for everyone. It’s important to maintain a well-diversified portfolio to minimise your exposure to risk and volatility.
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