Gold price jumps on Middle East turmoil. What to know before investing
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While the Middle East war shakes global markets, gold It draws attention once again as a potential safe haven investment.
The precious metal is often viewed as a diversifier and store of value in turbulent times. However, it is important to know what you are investing in and why before you start.
“Gold may be one way to invest against geopolitical shock, but there are certainly other ways, such as global energy and defense stocks,” said certified financial planner Barry Glassman, founder and president of Glassman Wealth Services in Vienna, Virginia, and a member of the CNBC Council of Financial Advisors. “It will be interesting to see what parts of portfolios survive during this volatility.”
Gold prices started to rise
The gold price has been on the rise in recent days due to the increasing conflict in the Middle East caused by the joint agreement. US-Israeli military strikes against Iran have been met with retaliatory strikes against Israel and other US allies in the Gulf region. The price of gold per ounce rose above $5,400 overnight and settled back into the $5,300 range by Monday afternoon.
Experts say that although the price of gold is below its record level of $5,594 on January 29, it may still have an upward potential this year. Analysts at J.P. Morgan said in a new research note that “conflict-driven volatility in gold has come and gone, but geopolitical risks will continue to simmer overall,” which has partly contributed to predictions that gold will reach $6,300 by the end of 2026.
“The market tends to give you clues about which asset classes to hold during downturns and global uncertainty,” said certified financial planner Patrick Huey, owner and principal advisor at Victory Independent Planning in Naples, Florida. “As long as we continue to see global turmoil, I think gold will continue to perform well.”
Already this year, gold is up about 23%. In 2025, it increased by approximately 64%. This compared to that Standard & Poor’s 500 index’Last year, it gained 16.4 percent. The increase in price has been attributed to several factors, including increased demand from both central banks and individual investors.
How to include gold in your portfolio?
Huey said it’s important to know that there’s no guarantee you’ll make money if you invest in gold. “There were long periods where gold did absolutely nothing, and there were long periods when it was very volatile,” he said. “And you can certainly lose money in gold.”
Many financial advisors recommend keeping your money. Invest a small portion of your portfolio in alternative investments, including gold. Huey said that they keep alternatives between 5 percent and 10 percent in their customer portfolios.
Many investors prefer to invest in gold through exchange-traded funds rather than purchasing physical gold, which must be stored. Thanks to ETFs, investors can invest in the precious metal without owning physical gold. Like all ETFs, they trade like stocks throughout the day. Most are passively managed, meaning they track an index and its performance, for better or worse.
Gold ETFs may come with different tax treatments
There are several different types of ETFs that give you gold exposure and they are worth knowing. their tax treatment.
Some ETFs, such as SPDR Gold Shares, invest directly in bullion (ticker: GLD). Each ETF share represents a specific amount of that physical gold.
If you invest in one of the ETFs through a taxable brokerage account, keep in mind that the profit you make when you sell may be taxed differently than gains from other investments, such as stocks and bonds, Huey said.
Short-term capital gains (profits from assets held for one year or less) are subject to ordinary income tax rates ranging from 10% to 37%. But even if you hold your gold ETF for more than a year, typical long-term capital gains tax rates (0%, 15% or 20%, depending on your income) do not apply, Huey said.
Instead, the IRS treats gold as a collectible item with a maximum tax rate of 28%. This is true even if you invest in gold through an ETF. Investors with income in higher tax brackets pay this rate.
Alternatively, you can buy ETFs that invest in gold futures contracts, such as the Invesco DB Gold Fund (ticker: DGL).
Huey said that these funds use derivative products instead of holding physical gold, which leads to a different tax treatment. Generally speaking, gains from these ETFs are subject to the IRS’s 60/40 rule: No matter how long you hold the ETF, long-term capital gains tax to which you are subject will apply to 60% of the gain, while regular tax rates will apply to 40%.
Another way to invest in gold through ETFs is by investing in gold mining companies, such as the VanEck Gold Miners ETF (ticker: GDX). Profits from these ETFs will be taxed at normal short- and long-term rates.
