Gold has cooled recently. After a strong run, a pause shouldn’t come as a big surprise.
A few reasons explain the pause …
The US dollar appreciated since the Iran war. Gold tends to move inversely to the dollar (see chart below).
Higher bond yields. When bonds yield more, holding gold (which pays no income) becomes marginally less appealing.
Profit taking. Gold had a very strong 2025 (+60%), prompting some investors to lock in profits. That added short-term selling pressure.
A calmer mood in markets. When near-term worries fade the rush into safe havens eases (gold is the classic safe haven).
A slower pace of central bank buying. Their steady demand has been a major driver, so any slowdown takes some pressure off the price.
Gold v US Dollar: An inverse relationship …
Gold is sticking to the plan …
Here’s the key point. We don’t own gold to chase performance. We hold it for portfolio balance. Strong performance (like in 2025) is a welcome bonus.
Gold is our portfolio insurance. When volatility appears elsewhere, gold is our asset to stabilise the overall portfolio. That is gold’s real value.
So I’m perfectly happy with my gold holding right now. It’s doing exactly what I expected. Nothing climbs in a straight line, and gold is allowed to pause for breath.
And by the way: we own gold via ETFs, not physical gold. I explained why that’s important in my note here.
The Bonus: Earn income while it pauses …
Here’s the best bit. We know gold pays no interest or dividends. But with options, we get paid good monthly income for owning gold (1-5% per month).
So even when gold is quiet, we can rent it out by selling options on the gold we already own. Here’s my video explainer.
How? In simple terms, we sell someone the right to buy our gold at an agreed price (strike price) within an agreed window, and they pay us a fee upfront to do so.
If gold drifts sideways or rises gently, that fee is ours to keep and we can do that every month, rinse and repeat.
The only trade-off is that if gold rockets past the strike price, we give up a slice of the extra upside, so we set the terms sensibly.
How much income?
We earn approx 1% per month this way. With a slight variation of the standard renting-out strategy, we can earn 3-5% per month.
Whichever way, the result is steady income from an asset we were going to hold anyway, earned while gold catches its breath.
Strong gold prices are welcome but getting paid to wait is as good, if not better.
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About Me
Manish Kataria is a Fund Manager. A CFA-qualified professional with 18 years’ experience in investment management and UK property. He has managed investment portfolios for JPMorgan and other blue chip investment houses. Asset classes managed include Equities, ETFs, Bonds, Funds and Options. Within property, he invests in and owns a range of assets including developments, HMOs, BTLs and serviced accommodation. InvestLikeAPro was set up so anyone can invest like a pro.
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