23 Apr 2026
Gold: diversification, protection and the importance of price
In this article we explore what’s going on with gold and if it deserves a place within your portfolio.
Investment
23 Apr 2026
In this article we explore what’s going on with gold and if it deserves a place within your portfolio.
Investment
Gold has firmly been in the spotlight over the past year. A combination of rising geopolitical tensions, inflation concerns, and increased central bank purchasing has helped push gold prices sharply higher through 2025 and into early 2026, before a pullback in March.
In this article we explore what’s going on with gold and if it deserves a place within your portfolio.
How does gold tend to perform in different market scenarios?
Gold is often talked about as a “safe haven”, but what does that really mean in practice? Put simply, investors tend to flock to gold when market confidence is shaky. That could be during periods of high inflation, currency weakness or geopolitical uncertainty. Unlike shares, gold isn’t tied to company profits, and unlike bonds, it doesn’t rely on governments paying back debt. Because of this, it can behave differently when markets are under pressure.
Gold can play a useful role as a diversifier and a form of downside protection. By diversifier, we mean an asset that behaves differently from others in a portfolio, helping to smooth returns when markets are under pressure.
For example, when inflation rises or geopolitical tensions escalate, gold has historically held its value relatively well. In those moments, it can help balance out losses elsewhere in a portfolio. However, it’s not a one-size-fits-all solution. In slower, more deflationary downturns where growth is weak and prices are falling, high-quality government bonds have often provided more reliable protection than gold. The takeaway? No single investment protects you in every situation. That’s why spreading your money across different types of assets still matters.
Why price matters more than ever
While we believe there is a long‑term case for gold as a diversifier in our portfolios, the price you pay matters more than most people realise.
If you look at gold’s price history over the past decade (see chart below), it is clear that the entry point is key. For example someone who bought gold at the start of 2025 would have seen very strong gains by early 2026. But just a few months’ difference in timing would have led to meaningfully lower returns. Prices can also change rapidly, so careful consideration of when you buy gold is important, as this can have a material impact on the performance achieved.
When prices are already high, much of the “safety” people are buying into may already be reflected in the price. In other words, you could be paying a premium for potential protection that may not deliver as much when you need it.
At the same time, the potential for negative returns increases. If geopolitical tensions ease or people become less worried about inflation, gold prices could fall back. We also saw gains over the past year supported by strong inflows from retail investors, which have more of a tendency to reverse quickly and lead to sharp, short‑term price corrections.
With the price of gold falling in March, we feel this correction has improved the balance between risk and potential reward compared with earlier in the year, making it more attractive. This all goes to say, the price you buy gold at is central to the role it plays in an investment portfolio, and should be well considered.
Gold’s place in a diversified portfolio
In summary, gold’s role in the portfolio depends on the type of market stress, the broader economic backdrop and, critically, the price at which it is bought. Gold can behave very differently from equities and bonds during periods of geopolitical or inflationary pressure, which is what gives it diversification value. Gold is therefore best viewed as one component of a diversified portfolio, rather than an asset to rely on in isolation. Other assets such as government bonds, real estate or infrastructure can also play important roles, depending on the risks facing markets. Holding an allocation to all of these assets increases your chances of the portfolio withstanding a wide range of market environments. And in a world where geopolitical uncertainty remains elevated and inflation risks persist, maintaining flexibility and diversification across multiple sources of protection remains essential.
Disclaimer
The information and opinion contained in this article should not be treated as a forecast, research or advice to buy or sell any particular investment or to adopt any investment strategy and are presented for information only. Any views expressed are based on information received from a variety of sources which we believe to be reliable but are not guaranteed as to accuracy or completeness by atomos. Any expressions of opinion are subject to change without notice.
Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments, and the income from them, may fall as well as rise and is not guaranteed. Investors may not get back the original amount invested.
If you have recently inherited a lump sum and are considering investing it, we can offer guidance.
The value of investments and any income from them can fall and you may get back less than you invested.
The value of investments and any income from them can fall and you may get back less than you invested.
