Escalating conflict in the Middle East has driven gold prices higher, as demand for so-called ‘safe haven’ assets increases. The gold price is off the all-time high we saw earlier this year, but up near 20% since the start of 2026.
This rally builds on two strong years of performance through 2025 and 2024, driven higher as global central banks built up allocations – favouring the precious metal over the US dollar reserves. Past performance isn’t a guide to the future.
This trend is likely to continue to provide a tailwind for gold, or at the very least, a floor. Goldman Sachs estimates that central banks will target around 20% of reserves in the precious metal, while China currently sits around 8%.
Alongside central bank buyers, gold has held appeal for retail and institutional investors too. Gold is the perceived ‘safe haven’ that investors turn to in times of geopolitical uncertainty, and there has been plenty in recent years – the Russia-Ukraine war, tensions in the Middle East, questions over the Federal Reserve’s independence, and ever-changing trade tariffs.
This article isn’t personal advice. Remember, investments rise and fall in value, so you could get back less than you invest. If you’re not sure if an investment’s right for you, ask for financial advice.
What does the conflict in the Middle East mean for markets?
As we mentioned in our 2026 market outlook, global uncertainty and stock market volatility are unfortunately likely permanent features of this year – and potentially next.
The war in the Middle East has impacted equity, bond and commodity prices, and will likely continue until both sides can reach a resolution, there’s a stable leadership in place and – crucially for markets – global trade of oil and gas can normalise.
But the Middle Eastern conflict is not the only source of potential volatility or risk facing investors this year. The Russia-Ukraine war continues, trade tariff uncertainty remains, and the US Mid-Term Elections have the potential to spur inflammatory narrative from President Trump which could impact markets.
Because of this, we don’t expect the sharp rally of recent history to be repeated or sustained, but we do think that gold has an important role to play in portfolios this year, though as always, diversification remains key.
What are the benefits of investing in gold?
Gold has historically always been seen as a portfolio diversifier. That’s because it’s tended to perform well during more turbulent times. Though this might not always be true.
Holding gold can potentially shelter your portfolio in difficult times, rather than shooting the lights out. But it’s worth noting that the past year has been a bit of an anomaly for gold as it performed better than most major stock markets.
So, if the world continues to be volatile – perhaps because of political tensions or the potential for ongoing conflict – then owning some gold as a hedge might be appealing.
However, it’s important not to be swayed by recent positive performance and remember that a gold allocation should only form part of a well-diversified portfolio. That’s because investing in gold isn’t for everyone. It’s a specialist market area so investors should be prepared to take a long-term view and accept the associated volatility.
For investors looking to include gold in their portfolio, here are a few investment ideas to get started.
Investing in funds, exchange traded products or investment trusts isn’t right for everyone. Investors should only invest if the investment’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of an investment before they invest and make sure any new investment forms part of a diversified portfolio.
For more details on each fund including risks and charges, use the links to their factsheets and key investor information.
iShares Physical Gold ETC
An exchange traded commodity (ETC) is traded on a stock exchange, like a stock, but tracks the price of a commodity or a commodity index.
The iShares Physical Gold ETC tracks the gold spot price. This is the current price in the marketplace at which gold can be bought or sold for immediate delivery. It could be a good way to benefit from any potential moves in the gold price, without having to own the physical commodity.
Investors should note, as this is an offshore fund, it will not normally be covered by the UK Financial Services Compensation Scheme.
Troy Trojan
For investors looking to own a fund with a mix of assets and let the manager do the hard work, then they could consider the Troy Trojan fund.
The managers, Sebastian Lyon and Charlotte Yonge, aim to grow investors' money steadily over the long run, while limiting losses when markets fall.
The fund is focused around four 'pillars'. The first contains large, established companies Lyon and Yonge think can grow sustainably over the long run, and endure tough economic conditions.
The second pillar is made from bonds, including US index-linked bonds, which could shelter investors if inflation rises. Some of the fund is also invested in UK gilts.
The third pillar consists of gold-related investments, including physical gold. The fund has tended to have around 10% invested in gold over time.
The final pillar is ‘cash’. This provides important shelter when markets stumble, but also a chance to invest in other assets quickly when opportunities arise.
The managers have the flexibility to invest in smaller companies, and the fund is concentrated which means each investment can contribute significantly to overall returns – both these factors can increase risk.
BlackRock World Mining Trust
BlackRock World Mining Trust aims to maximise returns to investors through a combination of capital growth and consistent dividends.
The managers achieve this by investing in mining and metals assets across the globe, including some higher risk emerging markets. While they mainly invest in shares, they’ll also look at other assets including mining royalties, bonds and some physical metals to help with diversification.
Around 37% of the trust currently invests in gold, though this could go up or down over time depending on the managers’ outlook for different metals and commodities. It also currently provides exposure to other commodities like copper, steel and platinum.
The trust can invest in unquoted investments (not listed on a stock exchange), which are higher risk and tend to be more difficult to buy and sell than listed shares. It can also borrow money to invest, with the intention of increasing returns (known as gearing) and use derivatives. These could magnify losses in a falling market and increase risk.
Annual percentage growth
28/02/2021 To 28/02/2022 | 28/02/2022 To 28/02/2023 | 28/02/2023 To 29/02/2024 | 29/02/2024 To 28/02/2025 | 28/02/2025 To 28/02/2026 | |
|---|---|---|---|---|---|
iShares Physical Gold ETC | 14.02 | 5.75 | 7.30 | 38.87 | 72.34 |
LBMA Gold Price | 14.18 | 5.88 | 7.43 | 39.04 | 72.55 |
Troy Trojan | 12.80 | -2.37 | 3.25 | 9.26 | 8.99 |
UK Retail Price Index | 8.18 | 13.84 | 4.53 | 3.41 | 3.15 |
BlackRock World Mining Trust PLC | 29.12 | 2.10 | -24.92 | 3.44 | 124.50 |
MSCI ACWI Metals & Mining 30% Buffer 10/40 | 26.38 | 0.42 | -7.67 | 4.89 | 101.85 |
