Is this a favorable moment to buy gold?

Are gold investments a good idea in the current market conditions? We look at the reasons why gold might be a good investment right now

Early in 2024, anyone who chose to invest in gold made a wise decision, and the global unrest that sparked 2025 has only strengthened the yellow metal's upward trend.

Monitor all markets on TradingView Global unpredictability, especially in the context of the Middle East conflict and the US presidential election, as well as gold purchases by central banks and governments, contributed to a 27.2% increase in gold prices in 2024.

The idea that the gains for gold investors were over was dispelled when gold prices increased by an additional 10.3% between 2025 and March 10.

Investing in gold has been regarded as one of the most reliable methods of wealth protection for at least 6,000 years.

Investors in the UK who are concerned about how inflation will affect their portfolios may be looking at gold as a means of hedging against it, as UK inflation unexpectedly rebounded to 3% in January, well above the Bank of England's target of 2%.

Adrian Ash, director of research at BullionVault, tells BFIA, "It's always a good time to buy gold." The price of gold has increased each time the stock market has lost value over long periods of time (when it matters), which could be for diversification, risk insurance, inflation hedging, a long-term bull market, or other reasons.

Profits over the last 12 months have demonstrated that gold investments can both protect a portfolio's value and serve as a source of growth.

According to Richard Hunter, head of markets at Interactive Investor, "during the tense relationship between the two countries, there has apparently been some sustained buying of gold by the Chinese authorities in an effort to reduce their reliance on the US dollar." "Gold holdings held by other central banks have also been growing.

Can your portfolio be diversified by gold?

One of the benefits of gold investing is that, in the current climate, it provides greater diversification from stocks than bonds.

"Shares and fixed income investments tend to track each other higher and lower when bond yields stand at today's higher levels," Fidelity International's investment director, Tom Stevenson, tells BFIA. The motivation to own a combination of bonds and shares is diminished as a result. And it implies that in order to achieve that portfolio balance, investors must search farther afield, into commodities and real estate.

In contrast, there is less of a correlation between gold and stocks. Despite posting gains over the last 12 months, the prices of gold and the SandP 500 have often moved in opposite directions.

Gold and the S&P 500 price movements from 1969 to 2024 are depicted in this chart.

There is some logic to the relationship, even though it is obviously not assured to last (picture courtesy of Adrian Ash, BullionVault). In general, stocks appreciate in value during market upswings and fall during downturns. People try to invest their money in the safest possible store of value during these downturns, and historically, gold has been one of the few safest stores of value.

However, Ash points out that the positive correlation between gold and stocks over the past year is at its highest level since May 1971, prior to the dollar departing the gold standard.

What percentage of your portfolio is in gold? BullionVault surveys its customers twice a year to get their opinions, but it doesn't forecast gold prices. Customers of BullionVault anticipate that the price of gold will rise by 17.6 percent from the end of 2024 to £3,070 by the end of 2025, according to the results of the most recent survey, which was conducted in December 2024.

What effects is Trump's second term having on gold investors?

The volatility that Trump's second term is bringing to the markets is another factor contributing to the continued popularity of gold investing worldwide.

"Investing in gold has surged as Trump 2.0 delivers exactly the policy chaos which the new President promised in the US election," Ash wrote recently.

Global investors are on edge because Trump appears to have initiated a tariff-driven trade war with some of the US's closest trading partners.

"Western investors are purchasing gold as an all-weather hedge, joining emerging-market central banks," writes Ash. More than monetary policy, traders across all markets are now keeping a closer eye on Truthsocial.

Investing in gold has also increased as a result of Trump's policies weakening the US dollar.

According to Juan Carlos Artigas, global head of research at the World Gold Council, "one of the main drivers of gold's performance during February was the US dollar's weakness."

Does AI drive demand for gold?

The macroeconomic variables, particularly the rate of US inflation, frequently influence the price of gold.

Because silver has so many significant industrial uses, gold is frequently seen as a commodity with no industrial uses. The gold-silver ratio, which measures the relative price of gold and silver, is actually the basis on which many investors trade the two metals. As of this writing, the gold-to-silver ratio is approximately 90; historically, strong silver price rallies have been preceded by ratios above 80. ).

Nonetheless, gold is a crucial raw material for some industries, such as electronics. High-end electronic devices usually use gold because it is an excellent electrical conductor. The device you are using to read this article most likely contains some gold.

The demand for gold in electronics peaked in 2010 and manufacturers looked for ways to shift away from it as prices increased between 2001 and 2011.

On the other hand, the World Gold Council claims that artificial intelligence (AI) is making this market more resilient. Gold is used to build the processors, memory chips, and sensors that are used on a large scale to create the data centers that train models like ChatGPT.

"Data can be processed and transmitted at high speed with minimal energy loss due to gold's superior conductivity," wrote Trevor Keel, a consultant at the World Gold Council, and Louise Street, a senior markets analyst. In addition, the corrosion resistance of gold guarantees component longevity and durability, which are essential for intensive and ongoing AI applications.

Is this a bad time for gold investments?

On the opposite side of the ledger, gold has experienced a prolonged run of gains, which may cause investors to question whether the time is right to purchase.

Over the last twelve months, gold prices have increased 33.4% in dollar terms, outpacing the S&P 500. The term "all-time" for gold has a long history, and it is currently trading close to its highest points ever.

"Speculative traders have obviously been drawn to gold's current record-breaking bull market, betting that these price gains will continue," says Ash.

It may be tempting for those who have held gold during this time to sell off a small amount of their holdings in order to profit from their gains. As gold is trading at nearly its highest level ever, those who haven't invested may think that now isn't the right time.

The exception to this is that gold has continuously been on the rise over the millennia that it has been traded. To put it another way, gold frequently trades at all-time highs and, occasionally, recovers to surpass them once more.

These types of runs are never assured to last forever, but in the case of gold, there is a wealth of trading history to examine, and over the long run, it primarily moves in one direction.

"The price you missed is irrelevant to new investors. "What matters to buyers today is what gold's history indicates it could accomplish in the event of the next crisis," says Ash.