Is Gold a Good Investment in 2026?
With gold surging past $5,000/oz and up ~12% year-to-date in GBP, is it too late to invest or is there more room to run? This analysis examines the bull and bear cases, shares what Goldman Sachs, JP Morgan and other major banks forecast, and explains how UK investors can gain exposure to gold.
Important: Not Financial Advice
This article is for informational purposes only and does not constitute financial advice. Gold investments can fall as well as rise in value. Past performance is not indicative of future results. Consider consulting a qualified financial advisor before making investment decisions.
The Quick Take
Year-to-date gain in GBP (£3,211 → £3,600+/oz)
Current price per oz (Feb 2026)
Recommended portfolio allocation
Sovereigns & Britannias are CGT-exempt
Gold in 2026: The Story So Far
Gold has continued its remarkable bull run into 2026. In GBP terms, gold opened the year at approximately £3,211 per troy ounce and has climbed to over £3,600/oz — a gain of roughly 12% in just six weeks. In USD terms, gold touched $5,072/oz on 11 February 2026, up 75% year-over-year.
Key 2026 Milestones
- →January 28: Gold hit £3,924/oz in GBP — an all-time high in sterling terms
- →January 30: The sharpest single-day crash since the 1980s — gold plunged from $5,630 to $4,700 in 24 hours (a $930 drop)
- →February: Rapid recovery back above $5,000, demonstrating the structural demand underpinning prices
The January crash was a stark reminder that gold can be volatile in the short term, even in a strong bull market. For UK investors, our live gold prices page tracks the latest GBP prices.
What Major Banks Forecast for Gold
Every major investment bank has a bullish outlook on gold for 2026. Here are the latest price targets, many of which have been revised upward in recent months:
| Institution | 2026 Target (USD/oz) | Key Driver |
|---|---|---|
| JP Morgan | $6,300 | Raised Feb 2026 from $5,055. Upside: $8,000-$8,500 |
| Goldman Sachs | $5,400 | By December 2026. Under-owned in portfolios |
| Bank of America | $5,000 | Fiscal deficits, reserve diversification |
| HSBC | $5,000 | Peak forecast. Average $4,600 |
| Morgan Stanley | $4,800 | Rate cuts, weaker dollar, China demand |
| Societe Generale | $5,000 | Macro and policy uncertainty |
| UBS | $4,500 | Portfolio diversification demand |
| Reuters Poll (median) | $4,275 | Safe-haven demand, rate cuts |
“We continue to have strong conviction that gold demand will have enough firepower to push prices toward $5,000/oz in 2026.”
— Gregory Shearer, Head of Base and Precious Metals Strategy, JP Morgan
Note: These forecasts are in USD. For UK investors, the GBP gold price also depends on the GBP/USD exchange rate — a weaker pound amplifies gains in sterling terms. Forecasts are not guarantees and actual prices may differ significantly.
Gold vs Other Investments: Historical Returns
How has gold compared to other UK investment options over the long term? The picture depends heavily on the time period:
| Asset | 10yr (2013-2023) | 20yr Annualised | 25yr Avg Annual |
|---|---|---|---|
| Gold (GBP) | +92.5% | ~9-11% | ~10.9% |
| FTSE 100 (price only) | +13.2% | ~3.5% real | ~5-7% |
| FTSE 100 (total return) | ~80-90% | ~6.3% | ~7-8% |
| UK House Prices | ~40-50% | ~4-5% | ~5-6% |
Sources: BullionVault, BullionByPost, ONS. FTSE 100 total return includes reinvested dividends. Gold figures in GBP. UK house prices from ONS UK HPI. Past performance is not a guide to future returns.
Key Takeaway
Gold has significantly outperformed the FTSE 100 (price only) over the past decade, but the gap narrows when dividends are included. The FTSE All-Share has topped annual performance charts most often historically (11 times), followed by silver (10) and gold (5). Gold's real strength is as a diversifier — it tends to rise when other assets fall, reducing overall portfolio risk.
2026 Gold Price Scenarios
Rather than a single price prediction, we present three probability-weighted scenarios based on different macroeconomic outcomes:
Key Drivers:
- →Continued central bank accumulation at 1,000+ tonnes/year
- →Goldman Sachs target: $5,400/oz by December 2026
- →Strong ETF inflows (250 tonnes projected for 2026)
- →Steady Asian demand from India and China
Key Drivers:
- →JP Morgan raised target to $6,300/oz (February 2026)
- →BRICS gold-backed currency pilot ('The Unit') gaining traction
- →Accelerated de-dollarisation and reserve diversification
- →Federal Reserve forced to cut rates aggressively
- →JP Morgan upside scenario: $8,000-$8,500 if household allocations increase
Key Drivers:
- →Stronger-than-expected US dollar rally
- →January 2026 crash repeated — gold fell $930 in 24 hours
- →AI-driven productivity boom reduces inflation fears
- →Risk appetite returns with equity market surge
Note: These scenarios represent our assessment based on current market conditions and analyst consensus. Actual outcomes may differ significantly. Gold prices are influenced by numerous unpredictable factors including geopolitical events, monetary policy decisions, and market sentiment.
The Bull Case for Gold
For a deep dive into the biggest bullish driver, see our analysis of why central banks are buying record gold in 2026.
▲Central Bank Buying at Record Levels
Central banks have purchased over 1,000 tonnes of gold annually for three consecutive years (2023-2025). In Q1 2025 alone, 244 tonnes were added. China, Poland, India, and Turkey are leading buyers as nations diversify away from US dollar reserves. JP Morgan projects 755 tonnes of central bank purchases in 2026.
▲Geopolitical Uncertainty
From ongoing conflicts to trade tensions, gold benefits from its safe-haven status. In times of crisis, investors historically flee to gold as a store of value.
▲Fiscal Debt Concerns
Government debt levels in major economies are at historic highs. Gold is seen as protection against potential currency debasement or inflation from debt monetisation.
▲Portfolio Diversification Value
Gold's low correlation with stocks and bonds makes it valuable for portfolio construction. When equities fall, gold often holds or rises, reducing overall portfolio volatility.
▲Asian Demand Growth
India and China represent massive and growing demand for gold, both for jewelry and investment. Rising middle classes in Asia continue to accumulate gold as a cultural store of wealth.
The Bear Case Against Gold
▼No Income Generation
Gold pays no dividends or interest. In a high-interest-rate environment, the opportunity cost of holding gold increases as bonds and savings accounts offer attractive yields.
▼Strong Dollar Risk
Gold is priced in US dollars. A strengthening dollar makes gold more expensive for international buyers and historically pressures gold prices lower.
▼Cryptocurrency Competition
Bitcoin and other cryptocurrencies compete for the 'digital gold' narrative, potentially diverting investment flows that might otherwise go to gold.
▼Equity Market Returns
If stock markets continue to deliver strong returns, the relative appeal of non-yielding gold diminishes. Risk-on sentiment typically hurts gold demand.
▼Storage and Insurance Costs
Physical gold requires secure storage and insurance, creating ongoing costs that erode returns. These costs don't apply to paper assets.
How to Invest in Gold in the UK
UK investors have several options for gaining exposure to gold, each with different characteristics, costs, and tax implications:
UK legal tender gold coins minted by the Royal Mint
~£900 (1 Sovereign)
High - easy to sell to any dealer
4-8% premium over spot on purchase
VAT-free, CGT-free (legal tender)
Best ForLong-term investors seeking tax efficiency
Pros
- ✓ No Capital Gains Tax on profits
- ✓ Direct ownership - no counterparty risk
- ✓ Highly recognisable and liquid
- ✓ Private wealth storage
Cons
- ✗ Higher premiums than bars
- ✗ Requires secure storage
- ✗ Insurance costs
- ✗ Bid-ask spread when selling
Investment-grade gold bars from LBMA-approved refiners
~£600 (5g bar) to £115,000+ (1kg)
High for standard sizes
1-5% premium (lower for larger bars)
VAT-free, CGT liable above £3k allowance
Best ForMaximising gold content per pound spent
Pros
- ✓ Lowest premiums per gram
- ✓ Direct ownership
- ✓ Available in various sizes
- ✓ Stackable for larger holdings
Cons
- ✗ Subject to CGT (unlike UK coins)
- ✗ Requires secure storage
- ✗ Larger bars less divisible
- ✗ Authentication important
Exchange-traded funds backed by physical gold in vaults
Price of 1 share (~£30-40)
Very high - trade like stocks
0.12-0.40% annual management fee
VAT-free, CGT liable, ISA eligible
Best ForConvenience and smaller regular investments
Pros
- ✓ Very easy to buy and sell
- ✓ No storage hassle
- ✓ Can hold in ISA or SIPP
- ✓ Low minimum investment
- ✓ Fractional exposure possible
Cons
- ✗ Ongoing fees reduce returns
- ✗ No physical possession
- ✗ Counterparty risk (fund provider)
- ✗ CGT applies to gains
Shares in companies that mine gold
Price of 1 share (varies)
High - stock exchange traded
Dealing costs only
Dividends taxed, CGT on gains, ISA eligible
Best ForHigher risk tolerance, seeking leverage
Pros
- ✓ Leveraged exposure to gold price
- ✓ Potential dividends
- ✓ Can outperform gold in bull markets
- ✓ ISA/SIPP eligible
Cons
- ✗ Company-specific risks (management, costs)
- ✗ Can underperform gold
- ✗ More volatile than gold itself
- ✗ Correlated with equity markets
Actively managed funds investing in gold miners or bullion
£100-500 (fund dependent)
Daily dealing
0.5-1.5% annual charge
CGT liable, ISA eligible
Best ForHands-off investors wanting managed exposure
Pros
- ✓ Professional management
- ✓ Diversified exposure
- ✓ Easy to set up regular savings
- ✓ ISA/SIPP eligible
Cons
- ✗ Higher fees than ETFs
- ✗ Manager risk
- ✗ May not track gold price closely
- ✗ Less transparent holdings
UK Tax Considerations
The Tax-Free Gold Strategy (Full guide)
UK legal tender gold coins - Gold Sovereigns and Gold Britannias - are exempt from Capital Gains Tax regardless of profit size. This makes them potentially the most tax-efficient way to hold gold in the UK.
Gold Sovereign
- • 22ct gold (916 fineness)
- • 7.98g total weight (7.32g pure gold)
- • ~£850-950 per coin (Feb 2026)
- • VAT-free, CGT-free
Gold Britannia
- • 24ct gold (999.9 fineness)
- • 31.1g (1 troy ounce)
- • ~£3,700-3,900 per coin (Feb 2026)
- • VAT-free, CGT-free
| Gold Type | VAT | CGT | Notes |
|---|---|---|---|
| Gold Britannia | Exempt | Exempt | Best for large, long-term holdings |
| Gold Sovereign | Exempt | Exempt | Ideal for incremental buying |
| Gold Bars (995+) | Exempt | Liable* | Lowest premium, but CGT applies |
| Krugerrands/Maple Leafs | Exempt | Liable* | High liquidity but no CGT exemption |
| Gold ETFs | Exempt | Liable* | ISA-eligible for tax-free gains |
| Silver Bullion | 20% | Liable* | VAT makes silver less attractive |
* CGT applies on gains above the annual allowance (currently £3,000 for 2025/26). Tax rules may change; consult a tax advisor for personal guidance.
How Much Gold Should You Own?
The General Guidance
Most financial advisors and portfolio strategists suggest allocating 5-10% of a diversified portfolio to gold or precious metals. This allocation aims to provide:
- →Diversification: Gold often moves independently of stocks and bonds
- →Insurance: Protection against extreme market events
- →Inflation hedge: Long-term purchasing power preservation
Pursuing financial independence or early retirement? Gold plays a specific role in FIRE portfolios. See our best FIRE resources UK guide for calculators and planning tools.
Minimal gold allocation for basic diversification.
Suits: Those primarily focused on growth assets with some defensive allocation.
Standard allocation recommended by most advisors.
Suits: Balanced investors seeking meaningful diversification without overexposure.
Higher allocation for those with strong gold conviction.
Suits: Those particularly concerned about inflation, currency risk, or geopolitical instability.
Frequently Asked Questions
Is gold a good investment in 2026?
Gold has been one of the strongest-performing assets in 2026, up ~12% year-to-date in GBP (from £3,211/oz to over £3,600/oz). Central banks have bought 1,000+ tonnes annually for three consecutive years, and major banks forecast $5,000-$6,300/oz by year-end. However, gold pays no income and can be volatile — as the January 2026 crash showed. Most advisors suggest 5-10% portfolio allocation.
What is the gold price forecast for 2026?
Major bank forecasts for 2026: JP Morgan raised their target to $6,300/oz (February 2026), Goldman Sachs targets $5,400/oz by December, Bank of America sees $5,000/oz, and HSBC forecasts a $5,000/oz peak. JP Morgan's upside scenario reaches $8,000-$8,500/oz. Key drivers include central bank buying (1,000+ tonnes/year) and geopolitical uncertainty. No forecast is guaranteed.
How much of my portfolio should be in gold?
Most financial advisors suggest 5-10% of a diversified portfolio in gold or precious metals. Conservative investors might hold 5%, while those seeking more inflation protection might go to 10-15%. Gold should complement, not replace, other investments like stocks and bonds.
What is the best way to invest in gold in the UK?
UK investors can access gold through: Physical gold (coins like Sovereigns and Britannias are CGT-free), Gold ETFs (easy to trade, stored for you), Gold mining shares (leveraged exposure), or Gold funds. Each has different risk/reward profiles and tax implications.
Is physical gold or a gold ETF better?
Physical gold offers direct ownership and potential CGT exemption (UK coins), but requires secure storage. Gold ETFs are more liquid and convenient but have ongoing fees and no CGT exemption. Physical is better for long-term holdings; ETFs suit active traders and smaller amounts.
Do you pay tax on gold investments in the UK?
Investment gold is VAT-exempt in the UK. For Capital Gains Tax: Gold Britannias and Sovereigns are CGT-free as legal tender. Gold bars and foreign coins are subject to CGT on gains above the annual allowance (currently £3,000). Gold ETFs are also subject to CGT but can be held in an ISA for tax-free gains.
Ready to Explore Gold Investment?
Check today's gold prices and explore our investment guides
Related Guides
Complete guide to gold ETFs available to UK investors, including costs and tax treatment.
Read Guide →Compare gold and silver as investments - which is right for your portfolio?
Read Guide →Step-by-step guide to buying gold in the UK - coins, bars, and ETFs.
Read Guide →Sources and References
Gold price data: GoldBroker, GoldPrice.org, Bullion-Rates.com (GBP historical prices).
Central bank gold purchases: World Gold Council quarterly reports (1,000+ tonnes annually 2023-2025).
Bank forecasts: JP Morgan Global Commodities Research (Feb 2026, $6,300/oz target); Goldman Sachs Commodities Research ($5,400/oz); TheStreet; Fortune; GoldIRAGuide aggregate forecasts.
Historical returns: BullionVault annual asset performance comparison; BullionByPost Gold vs FTSE 100 analysis; Visual Capitalist.
UK tax treatment of gold: HMRC Notice 701/21A (Investment Gold).
Last updated: 12 February 2026. This article is reviewed monthly to reflect changing market conditions.
Founder & Market Researcher
Taro has been actively investing in precious metals and financial markets for over 15 years. Frustrated by the lack of transparent, accurate gold pricing information in the UK, he built London Gold Exchange as a data-driven resource for fellow investors. The site combines real-time market data, verified dealer information from 242+ UK businesses, and insights drawn from years of hands-on experience in the gold market.
- ✓15+ years investing in precious metals & equities
- ✓Built verified database of 242+ UK gold dealers
- ✓Daily market data analysis and price tracking
Important Information
This content is for informational and educational purposes only and does not constitute financial advice, a personal recommendation, or an endorsement of any product or service. The value of gold and other investments can fall as well as rise, and you may get back less than you invest. Past performance is not a reliable indicator of future results.
London Gold Exchange is not authorised or regulated by the Financial Conduct Authority (FCA) and does not provide regulated investment advice. Before making any investment decisions, consider seeking advice from an independent financial adviser who is authorised by the FCA.