Investing in gold

If you’ve only got a minute:

• There are advantages when you invest in gold, as it is a “risk diversifier”, a hedge against inflation, and a safety asset.
• There are several ways to invest in gold like physical gold, buying into ETFs and unit trusts, and through robo-advisors.
• Gold ETFs and unit trusts are a low-cost and liquid option for investors looking to add the precious metal into an investment portfolio.

Throughout human history, gold has been prized as both a valuable commodity and a measure of wealth, often passed down through generations as family heirlooms.

While the jewellery industry accounts for almost half of global gold demand, its use extends far beyond consumer goods. Gold also plays a vital role in electronics manufacturing and has a long history as a backing for fiat (government-regulated) currencies.

As a part of the alternatives asset class, gold plays an important role in well-diversified investment portfolios for a number of reasons including a shelter from volatility and a hedge against geopolitical risk.

Gold had a stellar year in 2025, surging over 50% and pushing past an all-time high of US$5,000 per ounce in January 2026. This year, the chronically elevated levels of geopolitical uncertainty might be driving a shift in investor attitudes towards risk-hedging. Investors are increasingly open to the idea of adding gold as a risk diversifier to their investment portfolio, as they perceive fragility in the current world order.

The DBS Chief Investment Office (CIO) expects more upside to gold in the coming quarters for several reasons. Supportive factors that will prolong the asset’s bull run include US fiscal concerns, geopolitical and macroeconomic uncertainty, and the Central bank reserve diversification into gold.

DBS CIO’s 1H2026 price forecast for the yellow metal is US$5,300 per ounce and 2H2026 is US$6,250 per ounce, according to CIO Insights 2Q2026 report.

Supportive factors such as : i) US fiscal concerns; ii) Geopolitical and macroeconomic uncertainty; and iii) Central bank reserve diversification into gold will prolong the asset’s bull run.

DBS CIO’s 1H2026 price forecast for the yellow metal is US$5,300 per ounce and 2H2026 is US$6,250 per ounce (as of March 2026).

Read more: What are alternative investments?

What makes gold attractive

1. A “risk diversifier”

Gold is viewed as a risk diversifier given it is generally uncorrelated with other assets in an investment portfolio. For example, when stock markets decline (a typical characteristic of volatility), gold prices may rise, providing a portfolio hedge and reducing overall portfolio risk.

This belief has held through in previous recessions. What’s more, gold is highly liquid, which means investors are often able to cash in on their holdings with ease.

The importance of holding gold in an investment portfolio is more obvious in the past five years as global markets experienced heightened volatility.

Read more: Diversify to help manage investment risks

2. A hedge against inflation

In general, gold prices tend to rise when living costs increase. Moreover, investors buy or hold larger quantities of gold when high inflation is anticipated. This is driven by gold’s inherent value coupled with its finite supply. As such, it has proven to better retain its value than currencies – paper money.

With the ongoing war driving up oil prices and increased expectations of prolonged stagflation, we can expect that investor demand for gold remains supported.

3. Weakness in the US dollar

Like most commodities, the price of gold has an inverse relationship with the US Dollar as it is dollar denominated.

In previous periods of prolonged US dollar depreciation, investors have often turned to purchasing gold, a secure asset to preserve their purchasing power.

Read more: What should I do with my foreign currency? 

4. Safe haven demand

The yellow metal often performs better than other asset classes in this environment, as its price increases in both periods of financial uncertainty and political uncertainty.

Gold functioning as an effective geopolitical hedge stems from the view that the precious metal is useful for countries when they are faced with threats of US sanctions.

5. Increasing demand meets decreasing supply

Increasing wealth in emerging economies has resulted in higher demand for gold along with more interest by investors. With mining volumes generally falling over the past decade, gold prices could stay supported.

Furthermore, ongoing central bank gold purchases reflect a wider geopolitical trend of diversifying foreign exchange reserves and increasing holdings of neutral, hard assets, according to DBS CIO.

How to invest in gold

Investors typically purchase physical gold as bars or coins, storing them at home or in a bank safe deposit box. Some financial institutions offer gold certificates or savings accounts, eliminating the need for physical delivery.

When investing in physical gold, take note that choosing between gold bullion (minimum 99.5% purity) and gold jewellery depends on your financial goals, personal preferences, and practical considerations.

Gold bullion is generally preferred for long-term investment due to its better resale value and liquidity while gold jewellery offers cultural and aesthetic value as a tangible asset that can be worn.

You can also invest in gold mining companies, which are viewed as proxies to gold performance. Investors can benefit from share price appreciation as well as dividend payouts.

However, share prices of gold miners do not directly track gold prices, while factors such as operational efficiency, profitability significantly influence their share performance.

SPDR Gold Shares ETF - This ETF is a popular choice as it trades on the SGX and purchased through all brokerages in Singapore. In addition, CPF savings can be used for investing in it. Expense ratio for this ETF is 0.4% per annum (p.a.) with a lot size of 1 unit.

iShares Gold Trust - iShares Gold Trust has one of the lowest expense ratios (0.25% p.a.) and is the second-largest Gold ETF. This makes it easy for investors to enter and exit the fund.

Unit trusts with exposure to gold - Another option is to consider investing in a gold-focused unit trust, such as the Ninety One GSF Global Gold Fund which offers investors exposure to both established and emerging gold mining companies. This unit trust is part of the CIO Insights Funds, a curated selection of top-tier funds chosen by DBS investment experts, designed to help you optimise your portfolio.

Some robo-advisors offer exposure to gold through a professionally managed portfolio. These solutions typically allocate to gold and/or gold producers through ETFs and/or unit trusts.

Specifically, digiPortfolio's Global Portfolio provides exposure to gold miners across all risk profiles through the iShares Gold Producers UCITS ETF, which tracks the S&P Commodity Producers Gold Index, a benchmark for gold exploration and production companies.

In summary

Do note that while gold can offer portfolio diversification and risk reduction, it's not a guaranteed protection against all market downturns. Therefore, it's essential to consider gold as part of a diversified investment strategy, rather than a sole protection against market volatility.

It is important that you consider risk tolerance, your investment time horizon and market outlook for the yellow metal, among others.

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Sources:
DBS CIO, "CIO Insights 1Q25: Game Changers" (13 Dec 2024). Retrieved 6 Jan 2025.

DBS CIO, "Alternatives 1Q25: Gold – Resilience with Alternatives" (20 Dec 2024). Retrieved 6 Jan 2025.

DBS CIO, "Gold 3Q25: Stars Aligning Under A New World Order" (19 Jul 2025). Retrieved 6 Aug 2025.

DBS CIO, “Market Pulse: Bitter Sweet Symphony” (5 Jan 2026)

DBS CIO, “Alternatives 2Q26: Looking Past the Volatility” (20 March 2026)

Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability

All investments come with risks and you can lose money on your investment. Invest only if you understand and can monitor your investment. Diversify your investments and avoid investing a large portion of your money in a single product issuer.

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