Ever since it was first mined and refined by the ancient Egyptians in about 3600BC, gold has been a store of wealth. The first gold coins were struck in the fourth century BC in present-day Türkiye, and subsequent civilisations and cultures all used gold as an anchor for currencies.

While the legendary 19th century American banker JP Morgan once declared that “gold is money, everything else is just credit” the reality is that, in 2026, the use of gold is more diverse and complex than it has been in the past.

Since the US ended the link between the dollar and the gold standard in 1971, global currencies have been based on the fiat system of issuance by central banks. Gold has been free to float and find its own value as a separate asset on world markets.

Traditionally, the thinking has been that gold is a safe haven to which people turn in times of uncertainty and risk, but that is only part of the story. Central banks, for example, are key drivers of demand for gold, which they buy as a hedge against inflation, to diversify their foreign reserves and to shift their risk away from holding sovereign debt and, in particular, US Treasuries which have also been a historic safe haven for investment.

Gold continues to be in demand by the jewellery industry, with large production centres in China and India, but demand is sensitive to changing tastes in fashion and the fluctuations of economies. And when the price of gold shoots higher, as it did in 2025, demand from jewellers typically drops off.

Then there is also gold’s use in industrial processes and high-tech products such as satellites, computers and smartphones.

Place in portfolios

For investors, gold plays a strategic role in their portfolios, well beyond the knee-jerk response to speculatively buy as equities and bond yields fall, or when the world is in geopolitical crisis. In the last five years, gold has appreciated around 137% in Australian dollar terms, which is just under double that of the S&P/ASX 200, the main index on the Australian Securities Exchange.

“What underpins gold’s appeal today is a convergence of macroeconomic forces that are proving far more persistent than many investors expected: sticky inflation risks, rising sovereign debt burdens and growing uncertainty around the effectiveness of traditional portfolio diversifiers,” says the World Gold Council’s (WGC) senior market strategist John Reade.

“Geopolitical events inevitably push gold into headlines. But it’s worth being clear: while gold often responds positively to sudden shocks, those moments are rarely the best time to initiate an allocation.

“The protection gold provides frequently shows up before the event, not after it. That is why we consistently caution against treating gold as a tactical trade triggered by breaking news.”

After setting a sequence of new record highs in 2025 and surging through the US$5000 per ounce barrier to more than US$5400, gold outperformed other asset classes by some distance last year. Gold prices then came off in the first part of 2026, as many investors took profits to rotate back into other assets and as bond yields moved higher.

At just past the mid-year point, with gold at around US$4100, the WGC’s outlook is for the price to rebound towards US$4500 “if macro or geopolitical conditions deteriorate or rate expectations fall”.

“A stable, higher yield environment may however see gold decline further, but falls are likely to be limited to around 10–15% due to continued buying from central banks and long-term investors, plus growing Asian demand,” the WGC says.

Some analysts, such as the team at Toronto-based brokerage Maison Placements and at JP Morgan, say gold could test US$6000, as US debt swells and central banks continue to buy.

Different drivers

At The Perth Mint, Sawan Tanna CA is the chief commercial officer, responsible for the sales and marketing of products which also include silver and platinum.

Owned by the Western Australian Government, the mint refines gold and silver, with much of its gold coming from WA mines such as Northern Star’s Super Pit and Newmont Boddington. The Perth Mint is the third largest exporter out of Western Australia, after iron ore.

China recently outpaced the US as the main market for Perth Mint gold, with India and South Korea also major markets.

“Around 75% of the 196 tonnes of gold we refine each year is sourced from Australia, while the remaining 25% is sourced from other places such as New Zealand, Japan, Thailand and Africa, and we also receive gold all the way from Alaska,” says Tanna.

The mint produces a variety of coins, some of them novelty coins like the James Bond 007 series, and stores around A$15 billion worth of precious metals for investors.

For investors, the mint offers an exchange traded product (ETP) on the Australian Securities Exchange called PMGOLD (Perth Mint Gold). It is one of seven listed ASX ETPs which give access to the gold price and liquidity, while also being backed by physical gold.

Mirroring the fluctuations in the gold price, the ETP units could be bought for around A$58 in August 2026, while the 12-month high was just above A$78.

“We’re also seeing growing demand in India for ETFs [exchange-traded funds] particularly among younger investors who prefer to access gold in digital form,” says Tanna. “Historically, much of what we exported to India was destined for jewellery manufacturing but increasingly it is being held by custodians that support exchange traded products.”

Gold prices over 10 years (August 2016–2026)

Swings and roundabouts

Asian demand for gold ETFs is balancing a sell-off in the US. According to the latest data from the WGC, there is now US$526 billion in assets under management in gold ETFs globally.

“We are one of the few custodians offering a gold ETF that allows customers to convert their holding into physical gold,” says Tanna. “If you hold units in PMGOLD, you can open an account with The Perth Mint and either collect your gold or have that gold delivered anywhere in Australia.”

Tanna has observed the different drivers in the gold price in his 10 years at the mint.

When Donald Trump became US president and introduced his tariff regime, Tanna says there was “huge demand” on the Commodity Exchange (COMEX) market – the New York-based futures and options market for precious metals – largely coming from financial institutions and hedge funds.

The Chinese and Indian jewellery markets are highly sensitive to price.

“Generally, we’ve found that when the price of gold is at record highs or rapidly increasing, the traditional jewellery buyers in China and India stay out of the market,” says Tanna. “Western markets, such as the US, tend to be less price-sensitive and we saw that clearly when gold reached record highs last year.

“There is a clear difference in mindset between eastern and western customers. In the east, demand tends to strengthen when prices fall or interest in gold fades. In western markets, buying is more often driven by uncertainty and headline events.”

Gold as part of an investment mix

In New Zealand, Glenn Thomas is the co-founder of the Gold Survival Guide. In addition to being an educational resource, it is also the country’s largest repository of precious metals investing. Founded 20 years ago, the Gold Survival Guide also refines gold from New Zealand mines, is an exporter and an importer, and offers custody services.

“For a lot of people, gold is mainly a diversification that performs differently,” says Thomas. “So, when one asset class zigs, another one zags, and there’s a level of uncorrelation which people like between other markets and asset classes.

“Other people like it as inflation protection, because gold has probably outperformed the stock market indexes over the last 25 years or so.”

Another attraction is that when an investor holds gold, Thomas says “there is no counterparty” while, almost counterintuitively, it is also highly liquid.

“You’re not worrying about who is on the other side,” says Thomas. “There’s definitely a heightened appreciation for that counterparty risk element and while that might have been a fringe view a few years ago, I do see people being more comfortable buying physical gold than investing in ETFs.”

Looking at the performance of gold over the last period, Thomas says it “has been an interesting 18 months” as the price spiked and was then sold down.

“A lot of new people came into the market at the end of last year because the more prices rise the more people seem to be interested. That’s human nature,” he says. “I try and encourage people to do the opposite, because when it is quiet that is probably a good time to buy.”

Like Perth Mint’s Tanna, Thomas also sees a difference in buying patterns between eastern and western investors.

“When the price falls, the eastern investors from India and China recognise the value,” he says. “When demand is high, their demand starts to drop, but with western investors when the price goes up, that’s when they get interested.”

What’s next for gold?

Thomas sees the gold price as in a “plateauing phase” and says that even those investors who might be underwater on recent purchases should find themselves ahead if they resist the urge to sell and keep their gold.

Events such as the Iran war, while having a short-term impact on price, were not main drivers for the gold price in the longer term. Investors had been asking why the price was not rising in March 2026, after the first hostilities in February.

“Maybe it wasn’t rising because those main drivers had already happened and the price was so high that it had to take a dip,” says Thomas.

He notes current buying from investors in eastern economies and central banks, and sees gold as “fair value” and well supported at the moment. One thing Thomas isn’t prepared to do, however, is make a prediction on the gold price.

“If you put it on a timeframe, you’re pretty much guaranteed to be wrong,” he says. “All I’ll say is that it seems to me that if the prices haven’t bottomed out, they’re probably pretty close to it.

I’m not saying it’s going to suddenly take off again, but I think it’s more likely to be a steady zig-zagging sort of climb.”

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How has gold performed?

On 30 July 2016, the gold price for one troy ounce was US$1134.80.

Ten years later, it was US$4089.16. (One troy ounce is equivalent to 31.1035 grams.)

That’s an annualised compound annual growth rate (CAGR) of 11–15% per year.

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