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The weakening dollar seen investors pile into gold, pushing up the price of the precious metal to a new record high.
Gold climbed to a record $4,600 an ounce earlier this week after the US currency fell amid concerns about government policy and the inflation that could result, which has prompted investors to look for secure homes for their money. It eased back slightly towards the end of the week after geopolitical tensions showed signs of easing.
The precious metal has risen in value by around 70% over the past year since the start of the year and more than 7% in January 2026 alone.
Tom Stevenson, Investment Director at Fidelity International, said: “The rise in gold is just one element in a sharp rise in commodity prices in recent months. Industrial metals like copper have also been surging to new record levels. The rise in base metals and other hard assets partly reflects uncertainty about inflation and paper currencies. That is building on other fundamental attractions such as copper’s use in the industries of the future like clean energy, electric vehicles and the data centres required to fuel the AI revolution.
Here, we take a look at why turbulent economic and political times often see a surge in demand for gold, and why the precious metal can make a useful diversifier for investors.
Why has the gold price risen to a record high?
Political and economic uncertainty are typically the main factors behind any sudden surge in the gold price, with investors viewing it as a safeguard against mounting global tensions.
Susannah Streeter, Chief Investment Strategist, Wealth Club, said, “Gold is glittering as a safe haven, racing to fresh record highs as geopolitical tensions and unpredictable White House policy set investors on edge.
“Given Trump’s bolshy interventionist attitude demonstrated in the attack on Venezuela, fresh strikes on another nation state can’t be ruled out, particularly given the US has previous history with Iran, hitting nuclear sites back in June. Iran has voted retaliation, on US assets and Israel and there are concerns that it could re-ignite the Middle East tinder box.”
Many investors like the fact that gold is a physical asset, and precious metals of all kinds often prove particularly popular during periods of instability.
Sheridan Admans, Head of Fund Selection at investment platform TILLIT, said: “Gold and silver can often be good portfolio diversifiers with weak correlations to stocks, bonds, and other commodities. However, gold is considered a better diversifier of the two. Silver’s correlation to industrial demand can see its supply and demand factors change dramatically depending on the market backdrop.
“Historically, gold and silver have provided a reliable hedge against inflation and have performed well during periods of US dollar weakness. These factors, combined with the safe-haven status of precious metals, particularly gold, are key reasons why investors choose to hold them as part of their portfolio.”
Understanding the risks
If you’re considering investing in gold for the first time, make sure you do plenty of research first, and seek advice from a professional independent financial advisor if you’re not sure whether it’s the right option for you. It’s also important to be aware that investing in gold is not without risk, and that just because prices have risen sharply recently, they can also fall just as quickly.
It is important to remember that gold is a commodity and its value is intrinsically linked to its scarcity, which means that sharp swings in demand or supply will result in sharp swings in the price.
Experts often recommend capping your exposure to precious metals to say, 5% or 10% of your portfolio to help with diversification.
You can find out more about the importance of diversification in our guide Investing in your 50s and beyond: an introduction and about investing in gold in our article Five facts about investing in gold.
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