Gold can be a sensible long-term holding as a diversifier and a store of value, but it earns you nothing while you own it and its price can fall hard for years at a time. Whether it belongs in your portfolio comes down to your time horizon, what else you own, and how you plan to hold it. This guide sets out the honest case for and against, then the main ways to get exposure, including CFDs on Volity.
Here is what matters before you decide.
- Gold produces no income, so your return depends on the price rising and on gold holding up when other assets struggle.
- Central banks and long-term investors drove demand to record levels in 2025, which supports the case but says little about next year.
- Holding costs are real: bullion carries storage and spreads, funds charge a fee, and leveraged CFDs can lose money quickly.
- For most people gold works best as a small slice of a wider portfolio, not the main event.
Why do people buy gold?
People hold gold for a few overlapping reasons. The oldest is safety. When markets panic, investors move money into assets they believe will hold value, and gold has a long record of rising, or at least falling less, when equities sell off. Research from the London Stock Exchange Group describes gold as both a safe haven and a long-term strategic asset, since its price often moves independently of shares and bonds.
Gold is also a hedge against inflation and a weakening currency, since its supply grows slowly and it cannot be printed. The practical benefit for most investors is diversification. With a low or negative correlation to other assets, a modest allocation can lower the swings of a whole portfolio, which is the case the World Gold Council makes for holding gold as a strategic asset.
Central banks have also changed the picture. They bought around 863 tonnes of gold in 2025, well above the 2010 to 2021 average of roughly 473 tonnes a year, as they moved reserves away from the dollar, according to the World Gold Council. That steady official buying is a big reason prices have held firm, as we explain in how central banks influence gold prices.
What are the drawbacks of investing in gold?
The clearest drawback is that gold pays nothing. A share can pay a dividend and a bond pays interest, while a gold bar just sits there. When safe interest rates are high, holding a non-yielding asset carries a real opportunity cost, because you give up the income you could earn elsewhere, which is one reason gold can drift when central bank rates rise.
Gold is also more volatile than many people expect. Its price has swung by around 17% a year on average over the past two decades, a touch more than large-cap shares, and it has suffered long, deep falls. State Street, which runs one of the world’s largest gold funds, notes in its study of common gold misconceptions that the metal dropped roughly 45% from its 1980 peak and took years to recover.
Then there are the costs of holding it. Physical gold must be stored and insured, and dealers take a spread between buy and sell prices, so you start slightly behind. Funds charge an annual fee. Leveraged products carry the largest risks of all. The Financial Conduct Authority warns that most retail accounts trading contracts for difference lose money, and regulators cap the leverage retail clients can use on commodities such as gold for that reason, as set out in the FCA rules on CFDs.
Is gold a good investment right now?
This is the hardest question to answer honestly, because timing gold is difficult. The metal set a record above $5,500 an ounce in early 2026 after climbing around 65% in 2025, its best year since 1979, driven by record investment and central-bank demand reported by the World Gold Council. A run like that cuts both ways. The forces behind it, reserve diversification and worries about government debt, look structural rather than temporary, which the Council examines in its 2026 outlook. Even so, buying straight after a sharp rally raises the risk of a pullback, and past gains never promise future ones. If the high price is the only reason you feel drawn in, treat that as a warning rather than a signal.
What do gold price predictions say?
Forecasts from big banks give a sense of the range, though they are opinions with wide error bars, not targets to trade on. J.P. Morgan has been among the more bullish, pointing to figures near $6,300 an ounce for the end of 2026 in its research on gold prices, and several other banks lifted their numbers toward the $6,000 mark after the 2025 rally, as covered across the market, while others trimmed targets when rate-cut expectations faded. Respected analysts disagree by thousands of dollars, so take any single prediction, the bullish ones included, as one scenario among many.
Is gold a good investment in the UK?
For UK investors, one detail is worth knowing. Gold bullion coins from The Royal Mint, such as Britannias and Sovereigns, are exempt from Capital Gains Tax because they count as legal tender, so any profit on them is tax-free with no annual limit, as The Royal Mint explains. That exemption rests on their status as sterling currency under UK tax law, set out in HMRC’s capital gains manual. Bars and non-UK coins such as Krugerrands do not get the same treatment, so how you hold gold can change your tax bill. Gold is also priced in dollars, so if you save in pounds or euros, currency moves will add to or subtract from your return on top of the metal price. None of this is tax advice, and rules can change, so check your own position first.
How can you get exposure to gold?
There are a few practical routes for different goals. Physical gold means bars and coins bought from a dealer and held at home or in a vault. You own the metal outright, though you take on storage, insurance and the dealer spread. The London Bullion Market Association sets the quality standards most reputable dealers follow. Our guide to how to buy gold covers the steps, and the choice between metal and funds is laid out in physical gold versus gold funds.
Gold-backed funds hold bullion for you and trade like a share through an investment account. They are cheap and simple to buy and sell, which is why investors poured record sums into them in 2025, lifting holdings to around 4,025 tonnes according to the World Gold Council. You never handle the metal and pay only a small annual fee.
The third route is a contract for difference, which tracks the gold price without owning any metal. On Volity you can trade gold as a CFD through the Volity MT platform, going long or short with leverage of up to 1:500 depending on the product. You can open an account for $0, invest from $1, and place your first trade from $1, with Volity operating. Volity Trade Ltd acts as an introducing broker where clients are referred to and accepted by UBK Markets Ltd. The provider and terms for each account or service are identified in the relevant client documentation. Leverage magnifies losses as well as gains, so a CFD suits shorter-term trading and hedging rather than a buy-and-hold store of value. Our gold trading guide goes deeper, and silver trading works the same way.
So, should I invest in gold?
For most people the sensible answer is a modest yes, as a small diversifier rather than a core holding. A slice of gold can steady a portfolio when shares wobble, and the long-term demand picture is supportive, but it should not be the bulk of your savings, because it pays no income and can go through long dry spells. Match the way you hold it to your goal, using coins or a fund for a long-term hedge and a CFD for shorter-term trading. If you are comparing the metals complex, it is worth weighing whether silver is a good investment, along with platinum and palladium, before you settle on gold alone. This article is general information and not personal financial advice, so weigh it against your own circumstances first.
Want to see how gold moves before risking real money? Open a free Volity demo account and practise with virtual funds first.
Frequently asked questions
Is gold a safe investment?
Gold is often called a safe haven because it tends to hold value when shares and currencies fall, but safe does not mean risk-free. Its price is volatile and can stay depressed for years, so it protects a portfolio in a crisis better than it guarantees a profit.
How much of a portfolio should be in gold?
There is no single right figure; it depends on your goals and risk tolerance. Many long-term investors hold a small allocation, often around 5 to 10 percent, as a diversifier rather than a main holding. The aim is to steady returns, not to bet the portfolio on one metal.
Can you lose money investing in gold?
Yes. Gold can fall sharply and stay low for years, and you carry costs such as dealer spreads, storage or fund fees. With leveraged products like CFDs the risk is higher still, because losses are magnified and most retail traders lose money.
Is it better to buy physical gold or a gold ETF?
It depends on what you want. Physical gold puts the metal in your hands but comes with storage, insurance and wider spreads, while a gold-backed fund is cheaper to trade though you never hold the bullion. For active trading rather than owning, a CFD tracks the price with leverage and no metal at all.
