Why Global Institutions Still See Gold as a Core Long-Term Investment

Gold’s recent price surge has grabbed attention, but major global institutions now see it as a core long-term asset, valued for diversification, wealth preservation and resilience when markets come under pressure.

Table of Contents

Why Gold Is Still a Core Long-Term Investment
How Gold Supports Portfolio Diversification
Why Central Bank Buying Matters
Gold, Liquidity and Wealth Protection
Gold Price Forecasts From Major Banks
Frequently Asked Questions About Gold

Gold has surged in the past 18 months, climbing from around US$2,600 an ounce in early 2025 to close to US$4,750 by April 2026. But for many of the world’s biggest financial institutions, the real story is not just the price rise. It is the growing belief that gold deserves a permanent place in a diversified portfolio.

A recent report highlighted by State Street makes the case that gold should no longer be viewed simply as a crisis asset or a short-term trade. Instead, it argues gold can play an ongoing role in helping investors manage risk, protect wealth and strengthen long-term portfolio outcomes.

Gold’s role is becoming more strategic

State Street’s research centres on three core benefits of gold: diversification, capital appreciation and wealth preservation. One of the most important findings is that gold has historically shown very low correlation with both shares and bonds over long periods. In practical terms, that means it has often behaved differently when traditional assets come under pressure.

The firm also modelled portfolios with different levels of gold exposure and found that adding gold improved returns while reducing risk over a 20-year period. Portfolios with gold allocations of up to 10% delivered stronger annual returns and smaller drawdowns than those with no gold at all.

“Gold is no longer just something investors turn to in a crisis. More of the world’s biggest institutions now see it as a strategic, long-term holding that can sit alongside shares and bonds in a diversified portfolio.” Says Tony Coleman, managing Director of New Zealand Gold Merchants.

Central banks continue to support demand

A major reason for this shift is strong central bank buying. Official sector demand has remained well above historical averages, as countries continue to diversify reserves and reduce reliance on the US dollar. That buying has created an important layer of support under the gold price and strengthened the long-term investment case.

Gold also remains highly relevant in periods of inflation and currency weakness. Data sourced from State Street shows gold has historically performed well when inflation is elevated, while also tending to move inversely to the US dollar. For investors focused on preserving purchasing power, those characteristics remain especially important.

Why liquidity still matters

Another point often overlooked is liquidity. Gold is one of the most actively traded asset classes in the world, with deep global markets that can remain functional even during periods of financial stress. That matters because investors value assets they can access when other parts of the market become more difficult to navigate.

Of course, gold is not a replacement for growth assets. It does not generate income, and its price can still be volatile over shorter timeframes. But the message from major global firms is increasingly clear: gold’s role in a portfolio is becoming more strategic, not less.

It’s also worth noting; January’s sell-off in precious metals appears to have been driven more by market structure than deteriorating fundamentals, as higher COMEX margins increased the cost and risk of holding contracts.

What the major banks are forecasting

That longer-term view is also reflected in forecasts from some of the biggest names on Wall Street. Goldman Sachs has a year-end target of US$5,400, while Wells Fargo sees US$6,100 to US$6,300. J.P. Morgan is even more bullish, projecting gold could reach US$6,300 by the end of 2026.

While forecasts will always move with the market, the broader point is that the underlying drivers remain firmly in place.

“The forecasts themselves may change, but the fundamentals behind them are hard to ignore. Central bank buying, diversification demand, inflation concerns and ongoing geopolitical uncertainty are all helping reinforce gold’s long-term appeal.” Says Coleman.

FAQ’s

Why are institutions buying gold now?
Because central bank demand is strong, inflation and currency concerns remain in play, and gold continues to offer diversification benefits.

What role does gold play in a portfolio?
Gold can help diversify a portfolio, preserve wealth, and provide support during periods of market stress.

Do experts still expect gold prices to rise?
Yes. Bullish outlooks remain from Goldman Sachs, Wells Fargo, and J.P. Morgan, with J.P. Morgan the most optimistic.

Why Global Institutions Still See Gold as a Core Long-Term Investment