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Gold has lost its shine. But is there still money to be made?
Gold has lost almost a quarter of its value since January's peak, as rising interest rates and a stronger Australian dollar reshape returns for local investors.
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Gold has fallen about 23.8 per cent from its January record of US$5,420 an ounce, although prices remain more than 59 per cent higher than two years ago.
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A stronger Australian dollar has reduced returns for local investors, highlighting how currency movements can affect the value of gold holdings.
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Australians can invest through physical bullion, ASX-listed gold ETFs or gold mining stocks, each offering different levels of risk, cost and exposure.
It’s been a record-smashing year for the gold price.
On January 2, you could have bought an ounce of the yellow metal for US$4,332. By January 28, that same ounce was worth US$5,420 in intraday trade, marking a gain of more than 25% in just 26 days.
And those gains get even more impressive if we turn the clock back a bit.
Indeed, two years ago, in mid-October 2024, gold was trading for ‘a mere’ US$2,608 per ounce. If you’d bought at that price and sold at the January highs, you could have booked a gain of almost 108%.
However, investors who bought at those highs are nursing significant losses today.
Gold is trading at US$4,132 per ounce. That’s down about 23.8% from January’s highs, and slightly below where gold started the year. Though the gold price is still up more than 50% over two years.
Of course, as bullion is priced in US dollars, we’re talking in US dollar terms here. As Australian investors, the returns in Aussie dollars really matter.
Currency moves matter
Whether you’re investing in US-listed stocks or precious metals like gold and silver, it pays to keep an eye on currency moves.
When it comes to the Aussie dollar’s value compared to the greenback, numerous factors can influence its relative strength.
Among these, the AUD tends to gain against the USD when key commodity prices (think iron ore and coal) are higher, and when the Aussie economy is performing strongly.
Interest rate differences also play an important role. The Aussie dollar tends to be stronger when the RBA’s cash rate (currently at 4.60%) is higher than the US Federal Reserve’s rates (currently in the 3.75% to 4.00% band).
So, how does that impact our returns in Australia?
On 2 January, the Aussie dollar fetched 66.9 US cents, and an ounce of gold was worth AU$6,475. By 28 January, the Aussie dollar had surged 5.2% to 70.4 US cents, and an ounce of gold was worth around AU$7,698.
With the strong AUD, that equates to a gold price gain of around 19% in Australian dollar terms, compared to a 25% gain in US dollars.
The Aussie dollar is currently worth about 70 US cents.
What’s been moving the gold price?
Gold kicked off 2026 with some tremendous momentum behind it.
With the gold price having rocketed 64% in 2025, speculative buying from both institutional and retail investors helped drive the January surge to those new all-time highs.
And in January, many economists were still expecting the US Fed and other major central banks to cut interest rates this year. Gold, which pays no yield itself, tends to perform better in low or falling rate environments.
Instead, resurgent inflation, fuelled in part by soaring energy costs after the outbreak of US and Iranian hostilities at the end of February, has led the Fed to hike rates once and the RBA to lift rates four times this year.
While many central banks also continue to support the gold price with their bullion purchases, rising interest rates and investors engaged in profit-taking following January’s highs appear largely responsible for the 23% decline from those records.
How can I invest in gold?
Australian investors can gain exposure to gold in several ways.
First, you can buy physical gold coins or bars from reputable institutions, including ABC Bullion and The Perth Mint.
Both offer various storage options with different fees to securely hold your bullion. You can also opt for a high-quality home safe, but be aware of the security risks.
Second, numerous gold-backed exchange-traded funds are available on the ASX, which you can buy and sell just like shares.
These ETFs track the spot gold price and charge a small annual management fee. And while you won’t own the shiny metal directly, they remove the storage issue.
A third option, with more risk but potentially higher returns, is to invest in ASX gold miners or ASX gold-mining ETFs. If you’re not sure which ASX gold stocks to buy, ETFs offer more diversified exposure to a basket of gold miners.
The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website, you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.