Safe-haven appeal rises, but alternatives compete for inflows
Market turbulence tied to the war in the Middle East has pushed gold back to the center of investor attention, with the metal again being framed as a hedge during geopolitical stress. Financial advisors caution, however, that the case for adding gold depends on portfolio goals and risk tolerance, and that other assets can also perform defensively when volatility spikes.
Barry Glassman, a certified financial planner and the founder and president of Glassman Wealth Services in Vienna, Virginia, said gold can be one tool for responding to geopolitical shocks but not the only one. He pointed to categories such as global energy and defense stocks as other ways portfolios may hold up when markets are unsettled, adding that it will be revealing to see which exposures prove resilient in the current period of uncertainty.
Price action accelerates as conflict headlines drive demand
Gold has climbed in recent days as the conflict escalated following joint U.S.-Israeli strikes on Iran and retaliatory attacks aimed at Israel and other U.S. allies around the Gulf. The price for a troy ounce moved above $5,400 overnight before easing back into the $5,300 range by Monday afternoon.
Even after the pullback, the metal remains close to extreme levels. Gold is below its record high of $5,594 reached on Jan. 29, but some analysts argue there is room for additional gains. A J.P. Morgan research note said conflict-driven spikes can be temporary, yet geopolitical risks may remain elevated. The bank’s analysts forecast gold reaching $6,300 by the end of 2026.
Patrick Huey, a certified financial planner and principal advisor at Victory Independent Planning in Naples, Florida, said market behavior can signal which assets investors consider protective during downturns and uncertainty. He added that as long as global upheaval continues, gold may remain supported.
Performance has been strong over multiple timeframes. Gold is up about 23% so far this year after gaining roughly 64% in 2025. By comparison, the S and P 500 rose 16.4% last year. The run has been attributed to rising demand from central banks and individual investors.
Allocation discipline matters because gold can be flat for years
Advisors stress that buying gold is not a guaranteed path to profits. Huey said the metal has experienced long stretches of low returns as well as periods of sharp volatility, and investors can lose money, especially if buying after a rapid rally.
As a result, many advisors treat gold as an alternative allocation rather than a core holding. Huey said he typically keeps alternative investments, including gold, to around 5% to 10% in client portfolios. The objective is to gain diversification benefits without letting a single hedge dominate overall risk.
How investors gain exposure also matters. Many choose exchange-traded funds instead of physical bullion to avoid storage and security issues. Gold ETFs trade like stocks throughout the day and are often designed to track the price of gold closely, for better or worse, typically using passive index-style structures.
Gold ETF taxes differ by structure and can surprise investors
Tax treatment can vary sharply depending on the type of gold ETF used. Some funds hold physical bullion, such as SPDR Gold Shares with ticker GLD, where each share represents a defined amount of gold. Huey said investors holding these in a taxable brokerage account should be aware that gains may be taxed differently from typical stock and bond gains.
For short-term holdings of one year or less, gains are taxed at ordinary income rates ranging from 10% to 37%. For longer holdings, the usual long-term capital gains rates of 0%, 15%, or 20% may still not apply. Instead, the IRS treats gold as a collectible, which can carry a maximum tax rate of 28%, a feature that can be especially relevant for higher-income investors.
Other ETFs gain exposure through gold futures contracts rather than holding bullion, such as Invesco DB Gold Fund with ticker DGL. Huey said these funds fall under the IRS 60 40 framework, where 60% of gains are taxed at the investor’s long-term rate and 40% at ordinary income rates, regardless of how long the position is held.
A third approach is ETFs that hold shares of gold mining companies, such as VanEck Gold Miners ETF with ticker GDX. Profits from these equity-based funds are taxed under standard short- and long-term capital gains rules, which can make the after-tax outcome differ materially from bullion-backed products.
