The gold price has fallen sharply from its all-time high of nearly $5,600 (£4,150) per ounce reached in January 2026, now trading around $4,000 (£2,987). This decline has sparked debate among investment experts about whether the current lower price presents a buying opportunity.
Why Gold Has Fallen
The primary driver behind gold's decline is the expectation of rising interest rates. As inflation climbs again due to the Iran war, investors anticipate central banks will raise rates, making cash and bonds more attractive relative to gold, which pays no interest or income. This shift in investor preference has pressured gold prices.
Tony Redondo, founder at Cosmos Currency Exchange, noted that despite the 27% drop from January's peak, the long-term case for gold remains intact. "The long-term bull case remains intact, despite the aggressive 27% fall from January's high of $5,595," he said.
Should You Buy Gold Now?
Experts caution against expecting another rapid price surge. For most people, gold works best as a small part of a balanced portfolio rather than a bet on quick profits. Financial advisers typically recommend allocating no more than 5% to 10% of total investments to gold.
Paul Denley, chief executive at Oakham Wealth Management, advised a gradual approach. "Gold's strongest role in a portfolio is as a diversifier. At current levels, I'd favour buying gradually rather than trying to call the bottom, and owning gold for the protection it can provide, not simply because it used to be more expensive."
How to Invest in Gold
Gold can be purchased as coins or bullion, but many investors prefer an exchange-traded fund (ETF) that tracks the gold price. These ETFs can be held inside a Stocks and Shares ISA, avoiding the cost and security issues of storing physical gold.
Global central banks continue to buy large amounts of gold as they diversify away from the US dollar, supporting demand. Major financial institutions forecast a recovery, with UBS targeting $5,500 and Goldman Sachs $4,900 by the end of the year, though the price may remain choppy.
Key Considerations
Gold's lack of income generation is a significant disadvantage when interest rates rise. However, its role as a portfolio diversifier and hedge against geopolitical uncertainty remains valuable. Investors should consider their own financial goals and risk tolerance before making any decisions.
