Why have gold prices reached record highs, and what does this mean for you as an investor?

12 June 2025

Gold mining dates back as far as 4000 BCE, with evidence suggesting it spanned throughout Asia, Africa, and the Middle East during ancient times.

Gold has long been a coveted resource that humans have held dear, having represented wealth, prosperity, and even divinity for thousands of years. And of course, the Californian gold rush played an enormous role in the development of the modern Western economy.

However, while it is used widely in electronic products, gold is often considered a luxury commodity rather than a necessary resource. What’s more, the investment landscape has shifted dramatically in recent years, with a greater diversity of assets available than ever before.

But as the old saying goes, a commodity is only worth what someone is willing to pay for it. And the price of gold reached a record high of around £2,532 an ounce in May 2025, Sky News reports, proving that investors are clearly still willing to pay a high price for this precious metal.

So, you might be wondering why it remains such a valuable asset, and in light of this fact, be questioning whether you should be investing more in gold in order to grow your wealth.

Keep reading to discover why gold has held its value since 4000 BCE, and what its rising prices means for investors in 2025.

5 reasons gold is still considered valuable in today’s investment market

Despite no longer being used as currency in most cases, gold has held its value, and as you read above, its price recently reached record highs.

Let’s explore five key reasons why this may be the case.

1. In the age of digital currency, gold is a tangible asset

While digital currencies may be piquing some investors’ interests, those with a more traditional approach may be swayed towards physical assets such as property, collectibles, and gold.

Cryptocurrencies are surging in popularity, and stocks and shares are now exclusively held in online accounts such as Stocks and Shares ISAs or General Investment Accounts (GIAs). While we believe in fully diversifying your portfolio to mitigate risk, it may stand to reason that some investors want an asset they can safeguard in a more traditional fashion.

2. Stock market turbulence sometimes leads investors to consider alternative assets

As you may have read about in the news, or in our recent article, the Trump administration’s tariff policies have caused market fluctuations around the world.

With investors seeing share prices plummet briefly, and the value of their portfolio fall overall as a result, it’s understandable that some may have turned to commodities as an alternative.

3. Gold is a finite resource

The rules of supply and demand are simple and rarely stray from this logic: when supply is low and demand is high, prices rise as a result.

Gold remains a finite resource. The BBC published a report on “peak gold” – the theory that we have already mined the most gold ever to be mined in one year – in 2020, demonstrating that gold mining has flatlined in recent years. While there is still ongoing mining activity around the world, investors are aware that “new gold” can’t be manufactured; this may continue to drive its price up, as scarcity often motivates investors.

4. Gold remains a signifier of wealth

Even though nearly every facet of society has changed since thousands of years before the birth of Christ, precious metals have long remained a signifier of wealth.

Today, gold is often used to make fine jewellery, including wedding and engagement rings. For this reason, investing in heirloom jewellery pieces is still an attractive prospect for many, as these items may form part of a legacy that lasts generations.

5. Gold is a key component in the production of electronics

Although only around 5% of gold produced in the US is used for electronics, according to Garfield Refining, it still remains an important component of electronic manufacturing. Although copper can also be used in most cases, most manufacturers prefer gold due to its malleability and durability.

With technology forming part of our everyday lives, and the ongoing tech stock boom in the US and Asia, it stands to reason that many investors recognise the ongoing value of gold in the modern world.

3 factors to consider if you’re investing in gold today, or at least considering it

1. All investments should form part of a diverse portfolio

You might feel excited about the prospect of gold prices continuing to rise, especially regarding the points highlighted above. But remember: your investment portfolio should ideally remain diverse.

Take this article as an example. In January 2024, we published a piece about the “Magnificent Seven” technology stocks that dominated markets in 2023, citing data that proved the exponential growth of these companies (while warning that most bubbles eventually burst).

Yet as of 14 May 2025, four in seven of these “unbeatable” technology stocks (Apple, Tesla, Amazon, and Alphabet) have returned negative growth in 2025, CNBC reports. That’s because although these companies are still doing well, unit prices across all asset classes tend to fluctuate.

The point is, there is nothing wrong with investing in a commodity like gold – but ensure your portfolio remains diverse, to avoid any unnecessary shocks to your portfolio if a downturn occurs in future.

2. Past performance is not a reliable indicator of future performance

You might read the above phrase all the time, without even realising it. It’s a risk warning attached to most investment products, and for good reason: just because an asset has risen in price before, that doesn’t mean it is destined to do so again.

In fact, there is no crystal ball that tells us what the price of any asset will do in future. Gold is no exception. Our outlook is that a long-term mindset and a diverse portfolio usually produces a reliable return over the long term – at least five years, ideally 10 or more.

3. It’s always wise to seek bespoke advice if you’re making a new investment

If you are interested in alternative investments such as commodities, it’s wise to seek advice. Your financial planner can analyse years of market data, offer impartial advice based on qualifications and research, and help you align your investments with your ultimate goals.

To discuss anything you have read in this article, or any other financial matter, get in touch with our award-winning team today.

Email info@depledgeswm.com or call 0161 8080200.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Crypto assets are not regulated financial products so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies are also not covered by existing consumer protection laws and are not suitable for the majority of investors.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.