Cameron Judd, portfolio manager with Victor Smorgon Partners Resources Gold Fund, said that although physical gold does not yield, historically, the precious metal is uncorrelated with other assets.
“With countries, including the USA, running budget deficits, global debt levels are ever-increasing. As a result, governments continue to print more money, which is devaluing currencies,” Judd said.
“Gold is viewed as a physically backed global currency with a steady supply. Therefore, it is a ‘store of value’. Over the long term, the value of gold has continued to increase, unlike the dollar.”
Judd continued that gold is also a strong-performing asset with low correlation to local equities and bonds that can help improve the performance of Australian portfolios.
According to the World Gold Council, gold rose 26 per cent (in US dollar terms) in the first half of 2025, setting 26 record highs, driven by a weaker US dollar, rangebound rates and a highly uncertain geo-economic environment.
“With gold remaining an attractive investment, investors’ portfolios would benefit from a five to 10 per cent allocation given the superior risk-adjusted returns, lower volatility over time, and the portfolio hedging role it plays against global macroeconomic volatility,” Judd told SMSF Adviser.
He added that despite easing geopolitical risks and improving tariff headlines, the gold price rose 0.4 per cent to end June at US$3,303/oz. The Australian dollar gold price fell 1.8 per cent in June to close the month at $5,019/oz, just below record levels.
“The average gold price in the June quarter was $5,129/oz, an increase of $573/oz (or 12 per cent) on the previous quarter, the largest absolute increase quarter-on-quarter since 1979,” he said.
“We see further upside to the gold price, and it could head towards US$4,000. The gold price has risen for six straight months since the start of 2025. Gold’s performance during times of crisis, portfolio diversification and inflation hedging are key themes driving central banks and other investors to accumulate more gold, which is maintaining upward pressure on the price.”
Judd said that gold’s price rise has been driven by heightened uncertainty given the trade policies of the Trump administration in the US and ongoing conflicts in the Middle East and Eastern Europe.
“Investors are buying gold for its ‘safe-haven’ characteristics given concerns about higher inflation, weaker economic growth and significant geopolitical uncertainty.”
Ruth London, national sales manager for Gold Bullion Australia, said there has been a shift in the industry over the past few years towards allocating up to 20 per cent of investment in metals in response to economic uncertainty.
“When equities and property are in a bear market like you see right now [you see this kind of shift]. For example, if you follow the property market, there’s a bit of a softening on the high-end of town in Sydney and Melbourne, and from a holistic approach [to investing] it should be that when one asset is not working in your favour, you diversify into something that’s working in a different pattern,” she said.
“Markets all work in cycles but metals tend to do preservation of wealth [better]. It doesn’t drive a dividend and other things are more fast-moving, but when currencies are devaluing, as we can see in this period, gold is a perfect tool to assist in wealth preservation.”
Jodi Stanton, chief executive and founder of Rush Gold, said that although gold was traditionally seen as an investment for older clients, it is also now undergoing a shift, with more younger investors using precious metals as a diversification strategy within their portfolios.
“Advisers may have in the past suggested if their client was young, they could take more risk, and less gold, but I don’t think age has anything to do with this anymore.”
“I don’t think it’s necessarily a risk appetite thing either. I think it all comes down to non-correlation. [Precious metals] used to make up 5 to 10 per cent of a portfolio, now it’s going up to 15-20 per cent. It has a lot to do with the market cycle we’re in, where people are holding onto things again and we are seeing a rise in the allocation of investments to gold and other metals.”
