Gold price surges to record high – should you invest?

Gold prices jumped to a record high on Monday due to escalating unrest in Iran and rising political tensions in the US.

For the first time in history, gold soared past $4,600 per ounce. Silver also jumped to a fresh record high of over $86 per ounce.

What affects the price of gold?

Several key factors affect the price of gold:

Geopolitical tensions

During times of political conflict or uncertainty, gold is often considered a “safe haven” compared to stock markets which can become unstable.

For instance, US President Donald Trump’s trade tariffs over recent years and the recent seizure of the Venezuelan leader, Nicolas Maduro, led to increased market volatility*.

(*ps: volatility means that the value of an asset changes quite quickly.)

Gold reserves

Central banks keep physical gold in their vaults. Due to economic and political uncertainty over the last few years, they have been increasing their reserves. This rise contributes to higher demand for gold, which often leads to the precious metal increasing in price.

Foreign exchange rates

Gold is priced in US dollars (USD), so when USD is weaker, it’s cheaper for stronger currencies to purchase it.

However, when USD is stronger, it could be more expensive and increase prices for local buyers and those using other currencies.

Investor confidence

The price of gold tends to rise when more people are purchasing it.

Should you invest in gold now?

Gold tends to become popular during uncertain times as it tends to hold steady when the larger market shifts quickly.

However, past performance isn’t a guarantee of future results.

If you are thinking about investing in gold, it’s important that it forms part of a diversified portfolio of assets.

How do you invest in gold?

You can invest in gold without physically owning it by purchasing a special type of investment fund, trust or exchange-traded fund (ETF).

You can access these types of investments through a Stocks and Shares ISA, which is an account that allows you to invest up to £20,000 per year tax-free.

Check out our pick of the Best Stocks and Shares ISAs to help you find a suitable account.

If you’re new to investing, we’ve also got a roundup of the Best Stocks and Shares ISAs for Beginners.

You can also invest in a gold fund through a self-invested personal pension (SIPP).

Alternatively, it’s possible to purchase gold bars and coins from reputable and secure dealers.